ANDREW   KLOMAN 

OUT   OF   WHOSE    LITTLE    FORGE    GREW    THE    CARNEGIE    STEEL    COMPANY 


The  Inside  History 


of  the 


Carnegie  Steel  Company 


A  Romance  of  Millions 

By 

JAMES    HOWARD    BRIDGE 


..-       '         I.-'-."...'. 


NEW    YORK 
THE    ALDINE   BOOK    COMPANY 

32-34     LAFAYETTE     PLACE 


COPYRIGHT,  1903,  BY 

JAMES  HOWARD  BRIDGE 

Published,  July,  1903 

Entered  at  Stationers'  Hall,  London,  England 
Fourth  Edition.     (Sixteenth  Thousand) 


TO    RECALL    THEIR     FORGOTTEN    SERVICES 


of  a  <$reat  Business 
is  DrDtcatrt) 
tfje  £pemon>  of 


the  Men  who  Founded  ity  Saved  if  from  early 
Disaster  •,  <2#;/  w0#  its  First  Successes  : 


ANDREW    KLOMAN 
DAVID      McCANDLESS 

WILLIAM    COLEMAN 
THOMAS    MORRISON    CARNEGIE 

WILLIAM    R.  JONES 

WILLIAM      P.    SHINN 

DAVID  A.  STEWART 

HENRY  M.   CURRY 


AUTHOR'S    NOTE 
TO   THE   THIRD    EDITION 

To  meet  certain  criticisms  which  have  been  made  concern- 
ing the  propriety  of  his  publishing  this  book,  Mr.  Bridge  wishes 
to  say  that  he  was  never  Mr.  Carnegie's  "private  secretary"  as 
that  term  is  usually  understood.  For  several  years  he  assisted 
Mr.  Carnegie  in  literary  work,  especially  in  the  preparation  of 
Triumphant  Democracy ;  and  during  this  time  he  had  neither 
the  opportunity  nor  the  inclination  to  learn  the  business  secrets 
of  the  steel  companies.  This  book  does  not  contain  a  single 
fact  that  was  acquired  by  Mr.  Bridge  in  a  confidential  capacity; 
nor  has  any  fact  been  included  that  was  improperly  obtained 
by  anyone  else. 


PREFACE 

THIS  book  is  the  outcome  of  a  magazine  article  undertaken 
at  an  editor's  request.  Having  spent  a  number  of  years  in  the 
closest  intimacy  with  one  of  the  owners  of  the  great  steel  works, 
and  enjoyed  exceptional  opportunities  of  becoming  acquainted 
with  the  men  who  had  wrought  their  success,  I  entertained  lit- 
tle doubt  as  to  my  fitness  for  the  task.  So  recalling  the  stories 
I  had  heard  the  partners  tell,  and  adding  a  few  I  found  in  the 
writings  of  Andrew  Carnegie,  I  wrote  my  article,  and  found  I 
had  enough  material  left  for  a  couple  more.  These  also  were 
written,  and  in  due  time  published. 

To  my  surprise  they  brought  an  avalanche  of  dissent  and 
protest.  From  distant  Oregon  and  near-by  Meadville,  from 
Pittsburg  and  New  York,  came  word  from  unknown  corre- 
spondents that  my  conventional  story  was  only  a  repetition  of 
similar  publishings,  all  faulty  and  all  designed  to  glorify  some 
individual  at  the  expense  of  his  associates.  One  letter  con- 
tained an  expression  so  vigorous  that  it  has  won  a  place  for 
itself  in  this  book :  "  They  have  filched  their  laurel  wreaths  from 
the  tombs  of  the  dead."  Another  assured  me  that  what  I  had 
deemed  honorable  success  was  but  the  outcome  of  "  Macchiavel- 
lian  astuteness."  I  was  told  by  one  who  had  played  an  impor- 
tant part  in  the  early  history  of  the  enterprise  that  "the  bad 
faith,  treachery,  and  chicanery  that  lie  at  the  bottom  of  many 
great  fortunes  had  their  parallel  in  the  history  of  the  Carnegie 
interests."  "  Dear  me  !  "  sighed  an  unknown  Pittsburg  corre- 
spondent, "the  humbug  of  greatness  is  so  grotesque  in  the 
careers  of  those  we  know  that  it  makes  one  wonder  at  the  acci- 
dents which  happen  to  men — accidents  which  elevate  mediocrity 


vi  PREFACE 

and  the  commonplace  to  Olympian  heights. "  In  other  letters 
were  references  to  "porcine proclivities,"  "  pachyderm  entities," 
"a  vainglorious  medley  of  contradictions." 

Under  this  interesting  stimulus  I  determined  to  go  to  Pitts- 
burg  and  stay  there  until  I  had  got  at  the  core  of  things 
Carnegian.  My  experience  was  at  once  a  disappointment  and 
an  encouragement.  With  documentary  proof  before  me  I  found 
that  almost  every  man  who  had  written  a  line  about  the  events 
I  was  investigating  had  blundered;  one  in  dates,  another  in 
sequence  of  happenings,  a  third  in  the  placing  of  credit  for  in- 
ventions and  improvements;  and  of  them  all  I  found  Andrew 
Carnegie's  own  narrative  the  least  trustworthy.  Knowing  how 
excellent  is  his  verbal  memory,  it  puzzled  me  to  find  him  mis- 
taking his  own  birth-year;  claiming  to  have  been  the  first  in 
America  to  operate  the  Bessemer  process  of  steel-making;  to 
have  originated  iron  railway  bridges;  to  have  been  the  founder 
of  the  business  that  bears  his  name ;  to  have  been  ever  on  the 
alert  to  adopt  new  processes  and  mechanical  improvements ;  to 
have  maintained  without  a  break  the  friendliest  of  relations  with 
his  partners ;  to  have  been  the  principal  factor  in  the  gigantic 
growth  of  the  business;  to  have  fervently  tried  to  carry  his 
high  ideals  concerning  labor  into  his  own  works.  Instead 
of  this  I  everywhere  found  proof  of  the  contrary ;  and  when, 
finally,  I  was  notified  that  I  must  agree  to  submit  my  manu- 
script to  the  usual  Carnegie  revision  before  I  could  count  on 
any  assistance  of  the  present  officers  of  the  company,  my  disillu- 
sionment was  complete*. 

But  it  made  my  work  more  interesting.  To  write  a  'con- 
ventional history  from  the  official  records  of  the  company,  with 
the  aid  of  the  company's  press  agent  and  under  the  guidance  of 
an  official  censor,  was  a  thing  any  journalistic  fledgling  could 
do.  To  dig  into  the  secrets  of  the  great  corporation,  to  expose 
its  enormous  profits,  reveal  its  peculiar  business  methods,  its 
ways  of  heading  off  competitors,  its  internal  strife,  to  get  its 
first  annual  reports  and  even  its  later  balance  sheets,  and  to  do 


PREFACE  vii 

all  this  openly  and  without  a  bribe  or  the  betrayal  of  a  con- 
fidence, to  involve  no  employee  in  a  covert  act  or  breach  of 
faith — this  was  a  task  of  no  small  difficulty.  It  is  for  the 
reader  to  judge  of  my  success. 

Thus  disadvantaged,  I  have  not  hesitated  to  use  personal 
letters  and  private  documents  as  I  might  not  otherwise'  have 
done.  Whenever  an  interesting  fact  has  come  to  my  knowledge, 
properly  authenticated,  I  have  used  it  without  regard  to  its  im- 
plications. Yet  I  have  stated  nothing  that  cannot  be  verified. 
Often  I  have  risked  being  tedious  in  order  to  quote  a  corrobo- 
rative document.  In  other  cases  I  have  kept  the  proofs  by  me 
in  case  my  accuracy  should  be  called  into  question. 

From  this  independence  has  resulted  a  narrative  more-truth- 
ful than  it  could  otherwise  have  been.  Had  the  official  repre- 
sentatives of  the  Carnegie  Steel  Company  revised  this  story,  it 
is  certain  that  many  of  the  statements  it  contains  would  never 
have  seen  the  light  of  day.  More  than  once  the  company  has 
accepted  a  large  monetary  loss  rather  than  disclose  its  secrets 
in  court.  If,  therefore,  this  book  has  any  value  it  owes  it  to 
its  frankness.  While  the  author  expects  censure  for  some  of  his 
revelations,  he  is  willing  to  accept  it  in  the  cause  of  truth. 
The  conventional  history  of  the  concern,  based  on  benevolent 
aphorisms  and  platitudinous  maxims  about  thrift,  industry,  gen- 
ius, and  super-commercial  morality,  has  been  written  a  hundred 
times,  and  will  probably  be  written  again  and  again. 

The  Carnegie  Steel  Company,  as  will  be  seen  from  this 
narrative,  is  not  the  creation  of  any  man,  nor  indeed  of  any  set 
of  men.  It  is  a  natural  evolution ;  and  the  conditions  of  its 
growth  are  of  the  same  general  character  as  those  of  the  "  flower 
in  the  crannied  wall. "  Andrew  Carnegie  has  somewhere  said, 
in  effect :  Take  away  all  our  money,  our  great  works,  ore-mines, 
and  coke-ovens,  but  leave  our  organization,  and  in  four  years  I 
shall  have  re-established  myself.  He  might  have  gone  a  step 
further  and  eliminated  himself  and  his  organization ;  and  in  less 
than  four  years  the  steel  industry  would  have  recovered  from 


viii  PREFACE 

the  loss.  This  is  not  the  popular  conception  of  industrial  evo- 
lution, which  demands  captains,  corporals,  and  other  heroes; 
but  it  accords  with  evolutionary  conceptions  in  general. 

This  inevitableness  of  industrial  growth  is  frankly  recog- 
nized by  the  most  far-seeing  but  least  talkative  member  of  the 
group.  "  The  demands  of  modern  life,"  says  Mr.  Frick,  "  called 
for  such  works  as  ours ;  and  if  we  had  not  met  the  demands 
others  would  have  done  so.  Even  without  us  the  steel  industry 
of  the  country  would  have  been  just  as  great  as  it  is,  though 
men  would  have  used  other  names  in  speaking  of  its  leaders." 
This  is  a  frank  acknowledgment,  from  one  of  themselves,  that 
the  kings  of  industrialism  have  no  divine  right. 

Little  is  here  said  on  the  subject  of  the  tariff.  The  book  is 
neither  a  protectionist's  pleading  nor  a  free-trader's  argument. 
It  is  simply  the  story  of  the  growth  of  a  great  industry,  and  the 
author  deems  his  mission  fulfilled  in  setting  forth  the  facts  as  he 
finds  them,  leaving  the  reader  free  to  make  his  own  deductions. 

As  this  is  not  a  political  tract,  neither  is  it  an  ethical  trea- 
tise; and  the  author  considers  it  no  part  of  his  duty  either  to 
extenuate  or  accentuate  the  lapses  from  a  high  moral  plane 
which  may  occasionally  have  been  suffered  by  some  of  the  in- 
dividuals whose  efforts  are  here  described.  The  men  who  were 
instrumental  in  building  up  this  great  business  were,  originally 
at  least,  none  of  them  philanthropists.  There  was  hardly  a 
step  in  their  progress  which  had  not  the  impulse  of  unqualified 
selfishness ;  and  if,  in  the  light  of  retrospection,  some  of  their 
actions  seem  inconsistent  with  a  book  morality,  it  must  be 
remembered  that  in  the  fight  for  industrial  life,  as  in  that  ear- 
lier struggle  for  physical  existence,  the  victory  is  not  to  the  gen- 
tle and  the  tender-hearted,  but  to  the  others.  No  great  business 
has  yet  been  built  on  the  beatitudes;  and  it  is  not  all  cynicism 
that  condenses  a  negative  decalogue  into  a  positive  exhortation 
to  be  successful — "  somehow !  " 


CONTENTS 

CHAPTER    I 
THE  HUMBLE  BEGINNING 

1853-1863  :  The  little  Kloman  forge  in  Girty's  Run — Excellent  work- 
manship of  the  Kloman  brothers — Thomas  N.  Miller  and  Henry 
Phipps  join  them — Notable  extension  of  business — Prosperity 
brought  by  the  war — A  new  mill  is  built  at  Twenty-ninth  Street 
— Renewed  prosperity — Anthony  Kloman  sells  out — Quarrel 
among  the  partners,  ..........  j. 

CHAPTER  II 
"A  MOST  HAZARDOUS  ENTERPRISE" 

1863-65  :  Andrew  Carnegie  enters  as  peacemaker — Some  particulars  of 
his  life — Hir,  efforts  produce  fresh  discord — Makes  agreement  un- 
der which  Miller  is  forced  out — Thomas  M.  Carnegie  gets  an  in- 
terest— Miller  and  Andrew  Carnegie  start  a  rival  mill  at  Thirty- 
third  Street — Its  failure — Consolidation  of  the  two  mills  into 
Union  Iron  Mills  Company— Andrew  Carnegie's  disappointment 
— Reproaches  Miller  for  getting  him  into  the  iron  business — Calls 
it  a  "most  hazardous  enterprise  ",  .......  13 

CHAPTER  III 
EARLY  STRUGGLES  AND  SUCCESSES 

1865 :  Phipps  and  Carnegie  go  on  foreign  tour  and  leave  the  business 
— Its  narrow  escape  from  disaster — T.  M.  Carnegie  saves  it — Will- 
iam Coleman's  helpful  advice— Phipps'  trials  on  his  return— Un^ 
fortunate  outside  venture— Andrew  Carnegie's  quarrel  with  Miller 
— His  depreciation  of  the  enterprise— Purchases  Miller's  stock— 
The  first  labor  strike — Importations  of  foreign  workmen — Inge- 
nuity of  a  German — He  shows  Kloman  how  to  build  a  "  Universal 
Mill" — Andrew  Carnegie's  resistance  to  innovations — "  Pioneering 
don't  pay" — Opposes  the  great  slabbing-mill — Its  excellent  work 
— Kloman's  inventive  genius — Economies  of  Mr.  Phipps — Brings 
in  John  Walker,  his  brother-in-law — Forms  company  to  buy 
Twenty-ninth  Street  mill— Wilson,  Walker  &  Co.— Advantages 

of  the  change, 25 

ix 


x  CONTENTS 

CHAPTER  IV 
IRON  RAILWAY  BRIDGES 

1865 :  Formation  of  the  Keystone  Bridge  Company — Incorporates  pre- 
vious business  of  Piper  &  S  hi  frier— Andrew  Carnegie's  claims  as 
a  pioneer— His  strange  mistakes — Character  of  Piper— Iron  used 
in  bridges  a  hundred  years  before  Carnegie — Early  iron  railroad 
bridges — Commercial  morals  and  early  railroad  management — 
Officials  and  outside  interests— Influential  backing  of  the  Key- 
stone Bridge  Company — Its  early  prosperity— A  balance  sheet — 
Recent  losses,  ...........  39 

CHAPTER  V 
A  RIVALRY  OF  GREAT  FURNACES 

1872  :  Schemes  for  iron-smelting — Phipps  and  associates  invited  to  join 
them— Coleman  advises  construction  of  independent  furnace — 
Lucy  furnace  built — Enters  upon  long  rivalry  with  the  Isabella — 
Interesting  struggle  for  supremacy — Remarkable  achievements — 
Description  of  old-time  methods — Great  services  of  H.  M.  Curry 
— Inventor  Whitwell's  improvements — Valuable  discovery  by  Mr. 
Phipps — His  close  trading — Disagreements  of  partners — Kloman's 
unfortunate  venture — The  panic  of  1873 — On  the  brink  of  bank- 
ruptcy— Kloman  leaves  the  firm— Record  of  the  furnaces,  .  .  54 

CHAPTER  VI 
BEGINNINGS  AND  GROWTH  OF  THE  STEEL  BUSINESS 

1875  :  Erroneous  histories  published  of  this  event — Vanity  of  supposed 
founders — Filching  of  laurel  wreaths  from  dead  men's  graves — 
Coleman  the  real  founder — Secures  option,  with  T.  M.  Carnegie, 
of  the  Braddock  site — Gets  his  friends  interested — The  elder  Car- 
negie's opposition — Sees  progress  of  Bessemer  steel  in  England — 
Returns  enthusiastic  and  joins  the  enterprise— Helpfulness  of 
Colonel  Scott  and  Mr.  J.  Edgar  Thomson — Curious  result  of  strike 
at  Tohnstown — Captain  Jones  made  superintendent— His  remark-- 
able ability — Letter  exemplifying  his  broad  views— Causes  of  suc- 
cess— Discrimination  in  freight  rates — Shinn's  methods  of  ac- 
counting—Disagreements of  partners— They  lead  to  construction 
of  blast-furnaces— Wonderful  records  made  in  smelting — Also  in 
converting  works  and  rail-mill — Consternation  in  England,  .  71 

CHAPTER   VII 
SOME  INSIDE  FINANCIAL  HISTORY 

1875-1888  :  Secrecy  hitherto  maintained  concerning  profits — No  longer 
necessary — First  cost  sheets  and  profits — Andrew  Carnegie's  en- 
thusiasm— Forty-one  per  cent,  dividends — Carnegie's  prophecy  of 
enormous  profits— Results  even  more  astonishing — One  hundred 


CONTENTS  xi 

and  forty  per  cent,  in  one  year— Beneficent  effects  of  the  tariff— 
A  golden  stream  of  dividends — First  published  statement  of  yearly 
profits— Where  credit  is  due— Services  of  Holley,  Jones,  Shinn— 
Jones'  story  of  rivalries-^Part  played  by  different  partners — Mc- 
Candless,  T.  M.  Carnegie,  Stewart,  Andrew  Carnegie— How  the 
advertising  was  done, 94 

CHAPTER  VIII 
QUARRELS  AND  "EJECTURES" 

Internal  discord— Dropping  out  of  partners— Andrew  Carnegie's  am- 
bition— Interesting  letter — Coleman  leaves — Then  Kloman— 
Thomas  M.  Scott — Death  of  McCandless — Shinn 's  departure — Re- 
sulting lawsuit— Story  of  the  dispute  and  arbitration — Scott's 
ejecture — Carnegie's  "foresight  "—Consolidation  with  Lucy  Fur- 
naces— Important  letters  from  Scott  and  Shinn — Cost  and  earnings 
of  the  works 117 

CHAPTER  IX 
A  GLANCE  AT  PROCESSES 

General  prevalence  of  iron  ore — Primitive  smelting  processes — How 
modern  blast-furnaces  are  operated — The  hot-blast — Use  of  coke 
— How  it  is  made — Why  lime  is  added — The  puddling  process — 
Cast  and  wrought  iron — The  direct  process  of  Bessemer  steel-mak- 
ing— The  Jones  mixer — The  converter — Brilliant  pyrotechnics— 
Open-hearth  steel  process — Its  rapid  growth,  .  .  .  .136 

CHAPTER  X 
THE  RISE  AND  GROWTH  OF   HOMESTEAD 

1879:  Establishment  of  Amity  Homestead  byjohn  McClure— Kloman's 
rival  rail-mill — Joined  by  the  Pittsburg  Bessemer  Steel  Company 
— Pathetic  death  of  Kloman — His  uninterrupted  influence  on  Car- 
negie enterprises — Excellent  mill  and  poor  management^Trouble 
with  labor  ;  leads  to  disagreements  in  the  company  ;  and  final  sale 
to  the  Carnegies — "Carnegie  luck" — Extensions  and  improve- 
ments— Julian  Kennedy's  skill — Wonderful  mechanical  perfec-^ 
tion — Purchase  of  the  Carrie  furnaces,  .  .  .  .  .  /.  150 

CHAPTER  XI 
THE  INCOMING  OF  HENRY  CLAY  FRICK 

1882 :  The  enterprise  attains  its  majority — Ill-proportioned  growth — 
Lacks  mental  development — Frick  gives  coherency  and  definite- 
ness  to  plans — Gathers  scattered  plants  into  perfected  organiza- 
tion— Previous  attempts  at  consolidation — Frick' s  extraordinary 
career— His  development  of  the  coke  industry— His  great  fore- 
sight— Executive  and  organizing  genius — Henceforth  the  most 
imposing  figure  in  this  history, 167 


xii  CONTENTS 

CHAPTER  XII 

THE  CAPTURE  OF  THE  DUQUESNE  STEEL  WORKS 

1889:  Prick's  remarkable  feat  of  financiering — Extensive  works 
bought  without  the  outlay  of  a  dollar  ;  they  pay  for  themselves  in 
a  year — Story  of  their  construction  ;  similar  to  that  of  Homestead 
— Splendidly  equipped,  badly  managed— Labor  troubles — Car- 
negie heads  them  off  desirable  contracts — Extraordinary  methods 
of  competition — Discouragement  of  shareholders — Prick's  clever 
bargaining— Amazing  success ;  buys  works  for  bond  issue  and 
pays  bonds  six  times  over  from  profits — Their  later  development 
— Enthusiasm  of  local  editor, 174 

CHAPTER  XIII 

LABOR  CONTESTS  IN  THEORY  AND  PRACTICE 

Some  moral  causes  of  Homestead  strike— Utopianism  versus  business 
— The  puddler's  strike  of  1867 — The  threatened  trouble  of  1875  at 
Edgar  Thomson — No  sentimentality— Strike  at  Beaver  Falls ;  a 
frank  attempt  to  crush  the  labor-union — Bad  business  policy — An- 
drew Carnegie's  idealistic  publishings — "Thou  shalt  not  take  thy 
neighbor's  job  " — Incident  in  the  washerwomen's  strike — Pander- 
ing to  the  Knights  of  Labor ;  its  effects — Strike  at  Edgar  Thom- 
son works;  and  employment  of  Pinkertons — The  coke  strike  of 
1887;  Carnegie's  way  of  settling  it — Charges  of  bad  faith  ;  their 
justification — Renewed  disorder  in  the  coke  regions— The  troubles 
at  Homestead  in  1889 — Description  of  the  hardships  of  the  work- 
men— Carnegie's  embarrassing  talks  for  publication — His  cousin 
illustrates  with  a  parable — Unfortunate  settlement  at 
leads  to  further  difficulties — The  labor-unions'  joy, 


S*) 


CHAPTER  XIV 
THE  HOMESTEAD  BATTLE 

1892  :  Andrew  Carnegie's  chagrin— Prepares  for  war — Stern  meas- 
ures planned — Secret  instructions  to  Prick — Prick  tries  concilia- 
tion ;  its  failure — Statement  of  the  differences — Small  number  of 
men  affected — Closing  of  the  works — Strikers  assume  military 
organization  ;  depose  municfpal  authorities ;  other  arbitrary  acts 
— Sheriff  powerless  in  presence  of  mob  law — The  company's  at- 
tempt to  land  watchmen — An  all-day  battle  on  the  river — Barbar- 
ous use  of  dynamite  and  burning  oil — "No  quarter  to  scabs" — 
Story  of  an  eye-witness — Surrender  of  the  Pinkerton  guards ; 
brutal  treatment  of  the  wounded  and  defenceless — Homestead  in 
a  state  of  insurrection — The  calling  out  of  the  National  Guard,  .  203 

CHAPTER  XV 

ATTEMPTED  ASSASSINATION  OF  MR.  PRICK 

Furious  attack  on  the  chairman  ;  a  desperate  struggle  in  the  office — 
Thrice  shot  and  repeatedly  stabbed,  Mr.  ^Frick  makes  a  fight  for 
his  life — He  saves  the  assassin  from  summary  punishment — His 


CONTENTS  xiii 

magnificent  display  of  courage— His  tender  thought  of  Mrs.  Frick 
— World-wide  excitement — The  punishment  of  mutiny  in  the  sol- 
diers' camp — Carnegie  at  beautiful  Loch  Rannoch  ;  denies  himself 
to  reporters — The  interference  of  politicians — Carnegie's  cable- 
gram to  Whitelaw  Reid — Newspaper  comment  in  Europe  and 
America — Severe  condemnation  of  Carnegie — Prick's  unceremo- 
nious return  to  business,  .........  224 

CHAPTER    XVI 

THE  AFTERMATH  OF  WAR 

Resumption  of  work  at  Homestead  under  protection  of  militia — Sympa- 
thetic strikes  at  other  Carnegie  mills— World's  interest  in  Home- 
stead storm-centre — Incidents  of  camp  life  and  in  the  mills — Con- 
gressional investigations— W.  T.  Stead's  garbled  reports — The 
Knights  of  Labor  on  Carnegie  idealism— "Thou  shalt  not  take  thy 
neighbor's  job" — Despairing  violence  of  the  strikers — Attempts 
at  wholesale  poisoning  of  non-union  men— Conviction  of  the  crimi- 
nals— Withdrawal  of  the  militia;  renewed  violence — Schwab's 
conciliatory  influence — Carnegie  opens  another  library — Poetical 
effusions  in  honor  and  condemnation— The  Republican  debacle — 
Anger  of  the  protectionists  against  Frick  and  Carnegie — Some 
good  results  of  the  conflict — Carnegie's  return — His  repudiation  of 
responsibility,  and  praise  of  Frick *  236 

CHAPTER   XVII 
A  RELUCTANT  SUPREMACY 

1892-99:  Consolidation  of  Carnegie  works ;  effect  of  industrial  war — 
The  Union  Railroad — Romantic  story  of  acquisition  of  Mesaba  ore- 
fields — Due  to  Henry  W.  Oliver — Carnegie's  opposition  ;  leads  to 
coldness  with  Frick — Interesting  letters — Alliance  with  the  Rocke- 
fellers— Carnegie's  renewed  opposition;  his  amusing  prophecy- 
Free  gift  of  many  millions — Frick's  railroad  projects — Purchase 
of  a  line  to  Lake  Erie  ;  its  economical  operation — Oliver's  project 
for  Lake  steamers  adopted — The  company  become  self-sufficing — 
A  perfect  industrial  unit 254 

CHAPTER   XVIII 
THE  WORKINGS  OF  THE  CORPORATE  MIND 

1899 :  The  mental  evolution  of  an  industrial  organism — Workings  of 
machines  watched  and  tabulated,  but  no  regular  record  kept  of 
Board  of  Managers — Mr.  Frick's  changes — Weekly  lunches  estab- 
lished and  full  reports  kept  of  deliberations— Spirit  of  good-fellow- 
ship supplants  unfriendly  rivalries — Secrecy  concerning  business 
discussed — Official  record  of  such  a  meeting — Purchase  of  Bethle- 
hem machinery — Important  and  costly  additions — New  partners 
admitted ;  subject  to  the  iron-clad  agreement — Steel  car  works 


xiv  CONTENTS 

projected — Conneaut  pipe  works  recommended — An  interesting 
contract  —  Arbitration  versus  litigation  —  Conneaut  furnaces 
planned — Various  reports — The  reorganization  of  the  company,  .  275 

CHAPTER  XIX 

THE  ZENITH  OF  PROSPERITY 

Carnegie's  attempt  to  sell  out  to  English  investors  in  1889 ;  prompted 
by  reduced  profits ;  its  failure — Great  increase  in  gains  under  Mr. 
Prick's  management — An  amazing  record — Secret  figures  revealed 
— How  these  results  were  reached — Rapid  extensions  at  principal 
works — The  Frick  Coke  Company  ;  the  use  of  its  credit  to  finance 
the  Carnegie  concern — Fresh  attempts  to  sell  out — Carnegie's  esti- 
mates of  values  and  future  profits — Plans  a  reorganization  ;  in- 
volves retirement  of  Frick — Fresh  overtures  for  purchase— The 
famous  option;  bonus  $1,170,000 — Break  in  money  market ;  fail- 
ure of  the  syndicate's  plans — Carnegie  refuses  extension  of  option 
— Impressive  description  of  the  company  and  its  amazing  profits 
— Schwab's  enthusiasm  over  future  prospects;  rails  $12  a  ton — 
England  out  of  the  race — Other  plans  of  reorganization ;  failure 
of  them  all,  ,  .  . 293 

CHAPTER  XX 
CARNEGIE'S  ATTEMPT  TO  DEPOSE  FRICK 

Born  of  a  quarrel,  the  company  reaches  its  final  form  through  conten- 
tion— Causes  of  Carnegie's  animosity — Intolerance  of  rivalship — 
Early  effort  to  diminish  Frick's  prominence — Differences  concern- 
ing price  of  coke — Chagrin  over  the  syndicate's  failure  to  complete 
purchase — Ridiculous  publication  by  Stead— Annoyances  caused 
by  advertisers — The  coke  contract — Carnegie's  insinuation — 
Frick's  resentment — The  matter  becomes  official — Entry  in  min- 
utes of  company — Carnegie  tries  to  win  Walker  to  his  side — 
Schwab  refuses  to  transmit  Carnegie  offer — Frick's  resignation — 
Carnegie  not  satisfied  ;  gives  his  orders  to  managers  ;  their  reluc- 
tance to  act — Schwab's  difficult  position — Frick  resists  attempt  to 
force  him  to  sell  out ;  Lovejoy  and  Phipps  side  with  him^Equity 
suit  instituted — Frick's  pleadings  and  Carnegie's  rejoinder — Peace 
overtures — Conference  at  Atlantic  City 316 

CHAPTER    XXI 
THE  FAILURE  OF  THE  IRON-CLAD 

Validity  of  the  iron-clad  agreement — Its  history — Devised  for  control 
of  debtor  partners — Interest  revocable— New  iron-clad  of  1892 — 
Phipps'  energetic  opposition  to  it ;  not  signed  by  senior  partners 
— Agreement  of  1897  ;  signed  only  by  Carnegie — Renewed  refusal 
of  Phipps  to  sign — Agreement  lies  dormant  until  revived  to  meet 
Frick  case— Extraordinary  ritual  to  make  it  effective — The  docu- 


CONTENTS  xv 

ment  quoted — Schwab's  compliance  to  Carnegie's  orders;  Love- 
joy's  independence— Protests  of  Phipps  and  Frick — Attempt 
proves  abortive, 336 

CHAPTER  XXII 
THE  ATLANTIC  CITY  COMPROMISE 

The  training  of  junior  partners — Lovejoy  the  only  one  to  resist ;  his 
independence  helps  to  a  settlement ;  draws  up  agreement  of  con- 
ciliation—The Board  meets  at  Atlantic  City  ;  adopts  Lovejoy  agree- 
ment— Final  transformation  of  Carnegie  Steel  Company — Con-  . 
solidation  with  the  Frick  Coke  Company — Enormous  capitalization 
— The  return  of  peace — The  Society  of  Carnegie  Veterans,  .  .  346 

CHAPTER   XXIII 
THE  BILLION-DOLLAR  FINALE 

Prick's  plans  for  Conneaut  tube  works  ;  revived  by  Carnegie  to  force 
jmrchase— The  famous  bankers'  dinner — Schwab's  speech  ;  bless- 
ings of  industrial  peace — Morgan  impressed — Carnegie's  skilful 
diplomacy — Sale  to  Steel  Trust — Price  paid — Growth  of  Kloman's 
little  business  ;  from  less  than  $5,000  to  nearly  $500,000,000,  .  358 

APPENDIX 

Some  extracts  from  the  pleadings  of  Henry  C.  Frick  in  the  equity 
suit.  ,  365 


THE  HISTORY;    ......*.../; 

OF   THE 

CARNEGIE  STEEL  COMPANY 


THE    HUMBLE    BEGINNING 

IN   1858    a    small    forge  was    started    at 
^N*V  Girty's     Run     in     Millvale,     Duquesne 

Borough,  now  a  part  of  Alle- 
gheny. It  stood  on  the  edge 
of  the  straggling  village, 
and  a  muddy  road  ran  past 

f^^Kpegpc  it    along    the     river  -  bank. 

M||AJ:.  Judged  by  modern  standards 

it  was  an  insignificant  affair, 
with  a  little  engine  and  a 
wooden  trip-hammer — that 

first  cumbrous  mechanical  substitute  for  the  sledge-hammer. 
The  building  was  a  light  wooden  construction,  about  a  hundred 
feet  long  and  seventy  wide ;  but  even  in  these  narrow  limits 
the  scanty  machinery  seemed  at  first  lost  It  had  been 
brought  from  the  basement  of  a  near-by  dwelling  where  the 
business  was  started  five  years  before.  In  the  course  of  time 
the  vacant  corners  and  empty  spaces  were  gradually  filled  with 
axle-bars,  small  forgings,  and  iron  scrap  of  various  kinds,  and 
the  place  took  on  a  busy  air. 

The  men  who  owned  this   little   shop  were  typical  black- 
smiths, deep-chested,  muscular  fellows,  who  had  grown  up  in  the 
light  of  the  smithy  and  the  music  of  the  anvil.     They  were 
Andrew  Klowman  and  his  brother  Anton,  who  had  come  from 
i  i 


2 


THE  HUMBLE  BEGINNING 


Treves  ^ih  Prussia  a  few  years  before.  In  time  the  superfluous 
"  w  "  of  their  name  was  dropped,  and  Anton  became  Anthony. 

This: little  place,  which  its  owners  valued,  good-will  and 
stock,  at  $4,800,  was  the  beginning  of  one  of  the  greatest  in- 
dustrial aggregates  in  the  world,  valued  and  bought,  forty-three 
years  later,  for  nearly  five  hundred  million  dollars ! 

In  character  the  Kloman  brothers  were  very  different. 
Andrew  was  a  steady,  plodding  man  of  preternatural  gravity, 
earnest  in  his  manner  and  watchful  of  every  detail  of  cost  and 


A  German  trip-hammer. 

From  the  American  Manufacturer. 

profit.  Anthony,  although  the  elder,  had  no  high  sense  of 
responsibility.  He  was  careless  and  free  with  both  money  and 
time;  and  the  beer-can  was  often  raised  to  his  perspiring  face. 
Andrew  preferred  water,  not  only  as  costing  less,  but  as  leaving 
him  in  better  shape  for  bargaining.  And  in  little  things  he 
was  a  shrewd  bargainer.  He  had  been  trained  in  a  school 
where  a  pfennig — the  tenth  of  a  cent — was  the  unit  of  expendi- 
ture and  a  mark  the  equivalent  of  a  dollar.  Like  the  Prussian 
workmen  among  whom  his  youth  had  been  spent,  he  was  suspi- 
cious, and,  at  the  outset  of  his  career,  more  prone  to  insistence 


A    THIRD  INTEREST  FOR   $1,600  3 

on  his  own  rights  than  solicitous  about  those  of  others.  Later, 
he  outgrew  this;  but  the  trait  led  to  great  happenings. 

The  workmanship  of  Kloman  Brothers,  however,  was  fault- 
less ;  and  they  soon  won  a  reputation  for  a  reliable  product. 
Their  specialty  was  axles,  which  they  forged  out  of  scrap-iron, 
and  sold  to  railroads  and  car-builders  in  and  around  Pittsburg. 
The  peculiarity  of  their  product  was  caused  by  alternately  re- 
versing the  direction  of  the  fibres  while  forging  the  iron,  which 
gave  their  axles  a  superiority  soon  recognized  by  the  trade. 
The  practice  was  original  with  Andrew  Kloman. 

Among  their  clients  was  the  Pittsburg,  Fort  Wayne  and 
Chicago  Railway,  then  called  the  Ohio  and  Pennsylvania,  which 
had  shops  and  offices  at  Allegheny.  The  purchasing  clerk  of 
this  company  was  Thomas  N.  Miller,  who  was  born  in  Allegheny 
in  1835  and  had  grown  up  with  a  group  of  boys  who  were  des- 
tined to  leave  a  deep  impress  upon  the  industry  of  their  town. 
Miller  early  recognized  Andrew  Kloman's  abilities,  and  fre- 
quently put  business  in  his  way  by  introductions  and  recom- 
mendations to  manufacturers  using  axles  and  forgings;  and  a 
certain  intimacy  was  thus  established  between  them. 

In  1859  Kloman  came  to  Miller,  and  told  him  that  his  busi- 
ness was  growing  so  rapidly  that,  if  he  could  get  money  to  install 
a  second  trip-hammer,  he  could  double  his  output  and  easily 
market  it.  He  estimated  the  cost  of  this  addition  at  $1,600; 
and  he  offered  Miller  a  third  of  the  profits  of  Kloman  Brothers 
if  he  would  put  this  sum  into  the  business.  As  Miller  was 
purchasing  clerk  for  a  company  which  dealt  with  the  Kloman 
Brothers,  he  had  some  doubts  about  the  propriety  of  directly 
associating  himself  with  them  ;  and  he  so  expressed  himself  to 
Kloman.  "  But  I  have  a  young  friend,"  he  added,  "  who  might 
represent  me;  and  if  you  like  I'll  introduce  him  to  you." 
Kloman  consented;  and  Henry  Phipps  was  brought -into  the 
negotiation." 

Henry  Phipps  at  this  time  was  just  twenty  years  of  age,  hav- 
ing been  born  in  Philadelphia  on  September  2/th,  1839.  His 


THE   HUMBLE   BEGINNING 


father  was  a  shoemaker  who  had  moved  during  Henry's  child- 
hood to  Allegheny  City,  where  he  set  up  a  little  shop  for  him- 
self in  Rebecca  Street.  At  the  age  of  thirteen  young  Phipps 
was  earning  a  dollar  and  a  quarter  a  week  as  general  utility  boy 
with  a  jeweller  named  Barton,  who  had  a  small  shop  at  the  cor- 
ner of  Cherry  Alley  and 
Liberty  Avenue,  Pittsburg. 
In  1856  he  entered  the 
office  of  Dilworth  &  Bid- 
well,  who  had  something 
to  do  with  iron  and  iron 
spikes,  and  were  also  the 
local  agents  of  the  Dupont 
Powder  Company.  First 
he  was  office  boy,  and  later 
became  bookkeeper.  In  a 
few  years  the  firm  was  dis- 
solved, Dilworth  taking 
the  spike-mill  and  Bidvvell 
the  powder  business ;  and 
young  Phipps  was  taken  by 
the  latter  into  partnership.  He  was,  however,  still  bookkeeper 
for  Dilworth  &  Bidwell  when  Miller  proposed  that  he  should 
take  an  interest  in  the  Kloman  forge. 

Young  Phipps  readily  agreed  to  join  Miller  in  the  enterprise, 
and  set  out  to  raise  his  share  of  the  $1,600  required  by  Kloman. 
The  problem  was  not  easy;  and  it  was  only  temporarily  solved 
when  the  elder  Phipps  agreed  to  mortgage  his  house  for  $Soo; 
for,  not  knowing  that  this  $800  would  grow  into  $50,000,000, 
he  presently  regretted  his  offer,  and  showed  such  distress  that 
his  son  felt  obliged  to  release  him  from  his  promise.  Finally 
it  was  arranged  that  Miller  should  pay  the  whole  of  the  $1,600 
required  by  Kloman,  and  that  Phipps  should  refund  half  of  this 
out  of  his  profits  in  the  business.  In  return  he  was  to  have 
half  of  Miller's  interest,  which,  for  propriety's  sake,  was  put  in 


Young  Fhipps,  trudging  along  the  canal  bank 
on  his  way  to  Kloman's. 


Plate  II, 


HENRY  PHIPPS 

OF    KLOMAN    &    CO.;    KLOMAN   &    PHIPPS;    CARNEGIE,    PHIPPS    &    CO.,  LTD.; 
THE    CARNEGIE    STEEL    CO.,    LTD. 


PROFITABLE    WAR    CONTRACTS  5 

the  name  of  Phipps.  In  addition,  Phipps  was  to  keep  the 
Kloman  books. 

This  arrangement  proved  very  satisfactory  to  all  parties; 
and,  the  second  trip-hammer  having  been  installed,  the  business 
grew  rapidly.  Miller  secured  the  Klomans  the  preference  of 
the  Fort  Wayne  business,  and  recommended  them  to  new  firms 
building  cars  for  the  railroad,  such  as  Whittaker  &  Phillips 
of  Toledo,  Haskell  &  Barker  of  Detroit,  Jessup  Kennedy  & 
Co.  of  Chicago,  Barney  Parker  &  Co.  of  Dayton,  and  others, 
from  whom  the  bulk  of  their  trade  was  soon  received.  Phipps, 
with  the  energy  which  has  always  characterized  him,  walked 
three  miles  out  to  the  Kloman  shop  after  his  day's  work  at 
Dilworth's,  posted  up  the  books,  and  then  trudged  back  along 
the  dark  towing-path  of  the  Pennsylvania  canal  to  his  father's 
house  on  Rebecca  Street.  And  Kloman,  with  his  sleeves  rolled 
up,  worked  with  his  brother  and  half-a-dozen  men  in  the  forge. 

Then  the  war  broke  out,  and  axles,  which  had  been  selling 
for  two  cents  a  pound,  jumped  to  twelve  cents  a  pound.  And 
when  it  came  to  filling  government  orders  for  parts  of  gun-car- 
riages, there  was  no  limit  to  price  for  quick  deliveries.  The 
making  of  railway  supplies  dwindled;  and  soon  the  firm  was 
working  almost  exclusively  on  high-priced  government  orders. 

Under  this  stress  of  prosperity  the  primitive  forge  in  Girty's 
Run  was  found  inadequate  before  the  war  was  a  year  old.  A 
new  and  larger  mill  was  therefore  decided  upon,  and  the  firm 
was  reorganized.  Here  are  the  articles  of  partnership  : 

Articles  of  agreement  made  and  concluded  this  sixteenth 
day  of  November,  A.D.  1861,  by  and  between  Andrew  and  An- 
thony Kloman,  of  Duquesne  Borough,  of  the  first  part,  and 
Henry  Phipps,  Jr.,  of  Allegheny  City,  of  the  second  part,  all  of 
Allegheny  County  and  State  of  Pennsylvania,  witnesseth  : 

That  the  said  parties  have  agreed,  and  by  these  presents  do 
agree,  to  associate  together  as  equal  copartners  in  the  business 
of  manufacturing,  selling,  and  vending  axles,  iron  forgings,  and 
the  rerolling  of  scrap  into  iron  bar,  and  the  general  work  of  an 
iron-mill  and  all  things  pertaining  thereto. 


6  THE  HUMBLE   BEGINNING 

It  is  agreed  that  the  style  of  the  firm  shall  be  Kloman  and 
Company,  of  Pittsburg,  Pa. 

The  capital  stock  shall  be  $80,000,  to  be  paid  in  from  time 
to  time  as  the  wants  of  the  business  -may  demand,  in  equal  pro- 
portion by  the  said  parties. 

It  is  further  agreed  that  a  full  and  correct  inventory  shall 
be  made  of  the  machinery  on  hand  at  present  in  the  buildings 
now  occupied  by  Kloman  and  Co.,  of  Duquesne  Borough,  and  a 
fair  valuation  shall  be  made  thereof  after  the  removal  of  the 
same  to  the  new  establishment ;  and  in  case  the  said  copartners 
shall  not  be  able  to  agree  on  a  valuation,  then  the  same  shall  be 
adjusted  by  arbitrators,  of  whom  the  parties  of  the  first  part 
shall  choose  one,  the  party  of  the  second  part  one,  and  the  two 
so  chosen  shall  select  a  third ;  and  the  valuation  arrived  at  shall 
be  binding,  the  amount  so  valued  shall  be  allowed  to  the  said 
Andrew  and  Anthony  Kloman  as  cash  invested  in  the  new 
company,  and  six  per  cent,  interest  shall  be  allowed  thereon  to 
the  said  Andrew  and  Anthony  Kloman,  from  time  to  time,  until 
the  accruing  profits  to  the  party  of  the  second  part  shall  equal 
his  share  of  the  excess  so  admitted  to  Andrew  and  Anthony 
Kloman. 

It  is  further  agreed  that  all  purchases  made  after  said  ap- 
praisement of  Andrew  and  Anthony  Kloman's  stock  shall  be 
made  share  and  share  alike  individually  in  cash  advancements, 
the  said  Andrew  Kloman,  the  said  Anthony  Kloman,  and  the 
said  Henry  Phipps  each  advancing  one-third  of  all  the  cash 
required  for  the  business  of  the  firm,  up  to  the  full  amount  of 
the  capital  stock  aforementioned. 

It  is  further  agreed,  and  to  these  presents  the  parties  do 
bind  themselves,  that  the  said  Andrew  and  Anthony  Kloman 
shall  not  engage  in  any  other  business  whatever  and  shall  give 
their  undivided  attention  and  time  to  the  business  of  the  said 
copartnership,  without  charge  or  compensation,  unless  when 
travelling  on  business  of  the  company,  when  necessary  travelling 
expenses  shall  be  allowed. 

The  said  Henry  Phipps,  Jr.,  shall  keep  the  books  of  the 
firm,  or  exercise  a  supervision  over  them  during  such  evenings 
as  he  can  devote  thereto,  but  he  shall  not  be  required  to  further 
exertions  in  the  business  than  such  time  as  he  can  consistently 
spare  from  his  other  engagements,  and  he  shall  lend  his  influ- 
ence so  far  as  he  can  towards  forwarding  the  interests  of  said 
copartnership. 

There  shall  be  kept  during  the  copartnership  of  said  firm 
full,  true,  and  correct  books  of  account  by  double  entry  in  regu- 


ARTICLES  OF  PARTNERSHIP  y 

lar  sets,  in  which  shall  be  entered  all  purchases,  sales,  accounts, 
and  other  transactions,  and  the  same  shall  be  neatly  kept  and 
posted  by  the  party  of  the  second  part,  or  by  his  direction,  and 
shall  be  open  at  all  times  to  the  inspection  of  the  copartners. 

A  correct  and  true  inventory  shall  be  made  and  entered  in 
the  Stock  Book  on  the  first  day  of  July  or  January  of  each  year, 
and  the  profits  and  loss  estimated. 

No  purchases  or  sales  exceeding  $1,000  shall  be  made  by 
any  one  of  the  said  copartners  to  any  one  person  or  firm,  with- 
out due  consultation  and  approval  of  all  parties  hereto. 

No  partner  nor  partners  shall  sign  any  Bond,  Mortgage, 
Note,  or  any  Obligation,  or  make  any  endorsement,  or  assume 
any  liability,  written  or  verbal,  for  the  benefit  of  any  other 
party,  nor  shall  any  money  be  loaned  from  the  firm  without  the 
written  consent  of  all  the  parties  hereto. 

And  it  is  further  agreed  that  neither  of  the  parties  hereto 
shall  sell  or  assign  his  interest  in  said  business  without  the 
consent  of  all  the  partners  being  first  obtained  in  writing. 

Neither  party  shall  draw  out  more  than  his  share  of  the 
profits,  and  the  party  drawing  out  the  largest  amount  shall  pay 
interest  at  the  rate  of  six  per  cent,  on  the  excess  drawn. 

It  is  agreed  that  in  case  of  the  death  of  any  parties  hereto, 
the  business  of  the  firm  shall  be  carried  on  by  the  surviving 
partners  until  the  first  of  January  or  July  following,  as  the  case 
may  be,  when  an  account  of  stock  shall  be  taken  and  profits 
ascertained;  and  the  one-third  of  the  profits  and  stock,  after 
allowance  of  capital  stock  paid  in  by  each  of  the  partners 
respectively,  with  interest,  shall  be  paid  over  to  the  legal  heirs 
of  the  deceased  partner,  one-third  to  be  paid  in  cash  and  the 
remainder  in  equal  instalments  of  one  and  two  years. 

Such  copartnership  shall  commence  on  the  first  day  of  Janu- 
ary, A.D.  1862,  and  embrace  all  contracts  and  business  of  the 
present  firm  of  Kloman  and  Company  except  their  debts,  and  it 
shall  continue  for  and  during  the  space  of  five  years  thereafter; 
and  if  the  said  Henry  Phipps,  Jr. ,  shall  see  fit  so  to  elect,  he 
shall  have  the  privilege  of  continuing  for  a  further  period  of 
three  or  five  years. 

And  it  is  further  agreed  that  at  the  termination  of  this 
copartnership  a  valuation  shall  be  had  of  the  real  and  personal 
property  of  the  firm,  to  be  arrived  at  as  in  page  one  of  this 
agreement,  and  one-third  of  the  amount  (after  allowance  of 
original  capital  with  interest  to  each  partner)  shall  be  paid  to 
the  said  Henry  Phipps,  Jr.,  by  Andrew  and  Anthony  Kloman 
in  cash,  if  there  be  that  amount  of  money  available;  if  not, 


8  THE  HUMBLE  BEGINNING 

then  so  much  as  there  is  available,  not  less  than  one-third,  and 
the  balance  in  one  and  two  years  with  interest. 

And  it  is  agreed  that  in  the  event  of  Henry  Phipps,  Jr., 
retiring  January  1st,  1867,  he  hereby  binds  himself  to  execute 
and  deliver  to  the  said  Andrew  and  Anthony  Kloman  a  bond  in 
the  penal  sum  of  $10,000,  conditioned  that  he  will  not  engage 
in  a  similar  business  for  the  space  of  three  years  from  January 
ist,  1867. 

Witness  the  hands  and  seals  of  the  parties  aforesaid  the 
day  and  year  above  written. 

ANDREW  KLOMAN,  L.S. 

ANTON  KLOMAN,  L.S. 

HENRY  PHIPPS,  JR.,  L.S. 

Signed,  sealed,  and  delivered  in  presence  of 
As  to  Andrew  Kloman  and 
Henry  Phipps,  Jr., 

A.    LUDWIG   KOETHEN. 
As  to  Anthony  Kloman, 

CHAS.    A.    BURROWS. 

It  is  eloquent  of  hope  and  self-confidence  that  in  the  clause 
providing  for  the  purchase  of  a  deceased  partner's  interest,  only 
profits  are  mentioned.  No  one  entertained  the  possibility  of 
losses;  and  the  event  justified  their  faith.  This  clause  has  a 
further  interest  as  the  precursor  of  similar  provisions  in  later 
articles  of  association,  finally  elaborated  into  the  so-called  "  iron- 
clad "  agreement  which  became  so  famous  in  the  annals  of  the 
Carnegie  Steel  Company. 

An  interesting  annex  to  this  document  is  the  inventory  of 
the  first  Kloman  forge.  It  shows  with  indisputable  exactness 
the  humble  beginnings  of  the  business  which  afterwards  grew 
to  such  impressive  proportions.  It  is  as  follows  :  "  One  frame 
building  situate  in  Duquesne  Borough;  one  steam-engine;  two 
hammers;  one  furnace;  sundry  tools  and  merchandise;  one 
small  frame  house  and  lot." 

The  new  mill  was  built  on  a  large  plot  of  ground  at 
Twenty-ninth  Street,  Pittsburg,  leased  from  the  Denny  estate 
at  an  annual  rental  of  $324  for  twenty  years,  with  the  right 
of  renewal.  It  was  a  substantial  affair,  and  provision  was 


AN  EVENTFUL    QUARREL  9 

made  for  extensions.  An  inventory  made  after  it  had  been  a 
year  and  a  half  in  operation  shows  that  it  then  comprised  four 
puddling-furnaces,  four  heating-furnaces,  three  boilers,  one 
large  steam-engine,  four  small  engines,  one  steam-hammer, 
one  trip-hammer,  one  tilt-hammer,  one  train  of  bar-rolls,  one  set 
of  muck-rolls,  one  squeezer,  three  blacksmith's  forges,  four 
turning- lathes,  one  drilling-machine,  one  screw-cutting  machine, 
one  safe,  shafting,  pulleys  and  belting  connected  with  the  above 
machinery,  sundry  tools  and  merchandise,  office  furniture  and 
fixtures.  This  list  is  dated  April  i6th,  1863.  It  tells  the 
story  of  eighteen  months  of  exceptional  success,  of  progressive 
management,  of  the  development  of  new  lines  of  business,  of 
earnings  and  profits  put  back  into  the  business.  Contrasted 
with  the  meagre  resources  of  the  little  Duquesne  shop,  the 
Twenty-ninth  Street  mill,  or  the  Iron  City  Forge  as  it  was 
called,  was  a  large  and  well-equipped  establishment,  with  a 
large  capacity  for  highly  finished  products  worked  up  from  the 
crudest  forms. 

An  idea  of  the  great  profits  of  a  rolling-mill  at  this  period 
may  be  obtained  from  the  fact  that  between  1860  and  1864  the 
price  of  rolled  bar-iron  advanced  from  $58  to  $146  a  ton,  while  » 
the  cost  of  pig-iron  rose  only  from  $22  to  $59. 

It  will  be  noticed  that,  in  the  articles  of  partnership  just 
quoted,  the  Miller-Phipps  interest  was  again  put  in  the  name   / 
of  Henry  Phipps,  the  original  objection  to  Miller's  open  associa- 
tion with  the  firm  being  still  thought  valid;    although  it  was 
a  matter  of  remark  by  the  Klomans  that  Miller,  when  making 
purchases  for  the  Fort  Wayne  Road,  drove  a  closer  bargain 
with  them  than  did  any  other  of  their  customers.      The  condi- 
tion was  nevertheless  an  unfortunate  one ;  and,  as  might  have 
been  expected,  it  presently  gave  rise  to  disagreements  which    • 
ended  in  a  quarrel  and  rupture. 

It  is  necessary  to  advert  at  some  length  to  this  quarrel  be- 
cause it  had  an  important  bearing  on  the  subsequent  history 
of  the  enterprise.  Indeed,  it  may  be  said  to  have  completely 


io  THE  HUMBLE  BEGINNING 

changed  the  current  of  events,  giving  them  a  shape  contem- 
plated by  none  at  the  outset,  and  bringing  in  new  influences 
which  in  the  end  dominated  the  firm  and  gave  it  a  new  name. 

In  June,  1862,  Miller  went  to  England  for  a  holiday.  In- 
cidentally he  made  large  purchases  of  railway  supplies  for  his 
road,  which  were  shipped  in  haste  in  order  to  evade  the  war-tax 
of  thirty-five  per  cent,  which  had  just  been  imposed  on  such 
things.  On  his  return  in  November  he  was  met  by  Andrew 
Kloman,  who  made  a  statement  to  him.  This  meeting  and  the 
events  which  followed  were  so  important  that  Miller  at  the 
time  wrote  an  account  of  them.  In  this  statement  he  says : 

"  When  in  Europe  was  written  to  by  Phipps  that  my  pres- 
ence would  be  a  source  of  relief  to  them  (Kloman  &  Co.).  .  .  . 
On  my  return  I  was  soon  approached  by  Mr.  Kloman,  who 
stated  that  the  business  was  growing  too  great  for  him,  that  his 
brother  was  getting  careless  in  business,  and  that  he  could  not 
sleep  at  nights  owing  to  his  many  cares,  and  desired  to  know  if 
I  would  take  an  active  interest  in  the  concern  and  buy  his 
brother  out.  Mr.  Phipps  also  joined  in  urging  me  to  take  active 
part  and  buy  out  Anthony  Kloman.  I  desired  that  if  I  did  so 
I  might  be  privileged  to  stay  with  the  P.  Ft.  W.  and  C.  RR. 
until  January,  1865,  but  Mr.  K.  was  very  anxious  that  I 
should  take  hold  as  soon  as  possible.  So  I  accordingly  com- 
menced negotiations  with  Anthony,  assisted  by  Phipps  and 
Kloman,  and  after  considerable  trouble  induced  him  to  sell  at 
$20,000,  which  was  then  estimated  to  be  more  than  interest 
conveyed  was  worth  by  two  or  three  thousand  dollars." 

This  transaction  was  closed  on  April  i6th,  1863;  and  en- 
dorsement of  it  was  made  on  the  original  articles  of  partnership, 
November  i6th,  1861,  quoted  above.  This  endorsement  reads 
as  follows : 

Having  by  articles  of  agreement  taking  effect  the  sixteenth 
day  of  April,  1863,  bought  the  interest  of  Anton  Kloman  in  the 
above  firm  of  Kloman  &  Co.  and  paid  for  same  in  hand  the  sum 
of  twenty  thousand  dollars  (which  sum  covers  other  interests 
also),  and  having  done  this  by  the  assistance  in  influence  and 
by  the  desire  and  wish  of  the  other  two  partners,  and  at  a  price 


PARTNERS   AT  ODDS  n 

set  by  Andrew  Kloman,  I  do  this  the  thirteenth  day  of  June, 
1863,  on  the  original  papers  handed  to  me  by  Henry  Phipps,  Jr., 
accept  and  assume  the  partnership  of  Anton  Kloman  to  all  in- 
tents and  purposes,  to  the  full  and  complete  responsibility  in- 
volved. 

Witness  my  hand  and  seal  the  day  and  year  above  written. 

THOMAS  N.   MILLER. 
Witness, 

J.    H.    MILLER. 

It  appears,  however,  from  Miller's  written  statement  that 
before  the  actual  transfer  of  Anthony's  interest,  Andrew  Klo- 
man betrayed  great  uneasiness  at  the  passing  of  control  into 
the  hands  of  his  partners.  To  reassure  him,  Miller  gave 
Andrew  Kloman  a  bill  of  sale  of  half  the  interest  just  acquired 


NOTICE 

HE  HE  BY    GIVEN    THAT 

be  t  _§_  THOMAS  N.  MILLER  is  not  a  member  of  our  firm, 
MB  £  nor  baa  he  any  authority  to  transact  business  on  cur, 
'  "account. 

120  B  KLOMAN   «fe  CO. 


[Photographic  Reproduction.] 


E? 


from  Anthony ;  and  for  a  time  Kloman  seemed  satisfied  with 
this.  Presently  he  realized  that  he  still  owned  only  half  the 
stock  of  the  company;  and,  to  the  surprise  of  Miller  and  the 
alarm  of  Phipps,  he  demanded  that  the  latter  sell  out  to  him. 
Phipps  naturally  demurred  to  such  summary  ejection  from  a 
business  which  was  daily  becoming  more  valuable,  and  which 
he  had  helped  to  build  up ;  and  he  set  himself  to  resist  the  pro- 
posal. Then  Kloman  turned  to  Miller  and  asked  him  to  sell ; 
and  presently  all  three  were  at  odds.  The  situation  was  made 
worse  when  Kloman  discovered  that  Phipps,  at  Miller's  sugges- 
tion, had  sold,  some  time  before,  a  share  of  their  first  interest  to 
William  Cowley,  who  had  enlisted  in  the  war  and  had  died  of 
typhus  fever  contracted  on  the  field  of  Fredericksburg.  This 


12  THE  HUMBLE   BEGINNING 

share  was  now  offered  for  sale  by  the  young  soldier's  brother, 
who  was  his  executor.  It  was  bought  back  by  Miller  for 
$8,500;  but  Kloman  was  naturally  alarmed  to  learn  that  any 
part  of  the  business  which  bore  his  name  should  be  sold  with- 
out his  knowledge  and  in  contravention  of  the  articles  of  part- 
nership; and  he  became  further  incensed  against  Miller.  The 
strain  reached  fracture-point  when  Miller,  pending  a  satisfac- 
tory settlement,  withheld,  as  agent  of  the  Fort  Wayne  Road, 
certain  payments  due  from  it  to  the  Kloman  firm ;  and  Phipps, 
who  had  tried  to  remain  neutral,  was  forced  to  take  sides 
against  his  old  friend  Miller. 

It  unfortunately  happened  about  this  time  that  a  paragraph 
appeared  in  a  local  paper  to  the  effect  that  Miller  had  bought 
an  interest  in  the  Kloman  business,  and  that  the  style  of  the 
firm  was  to  be  changed  to  Kloman  &  Miller.  It  was  probably 
one  of  those  unauthorized  statements  which  help  to  make 
up  the  local  news  of  a  paper;  but  it  had  the  merit  of  truth. 
Nevertheless,  by  the  advice  of  Ludwig  Koethen,  his  lawyer, 
Kloman  next  day  inserted  an  advertisement  contradicting  the 
statement.  This  appeared  in  the  Pittsburg  Evening  Chronicle 
on  Thursday,  August  2Oth,  1863. 

This  was  the  condition  of  affairs  when  the  services  of 
Andrew  Carnegie  were  sought  as  peacemaker,  with  results  that 
recall  the  ancient  fable  of  the  lawyer  and  the  oyster.  As  the 
world  knows,  each  of  the  litigants  got  a  shell. 


Each  of  the  litigants  got  a  shell." 


CHAPTER    II 


Carnegie's  Birthplace. 


A  MOST  HAZARDOUS  ENTERPRISE" 

ANDREW  CARNEGIE  was 
born  in  a  little  tile-roofed  cottage 
in  Moodie  Street,  Dunfermline, 
Scotland,  on  November  25th, 
1835.  His  father  was  a  weaver 
of  fine  damasks,  taking  the  weft 
and  warp  from  merchants  and 
working  them  up  on  his  own 
loom  at  home.  The  introduc- 
tion of  steam-looms  and  the  ex- 
tension of  the  factory  system  to  the  linen  trade  put  Carnegie 
and  other  hand-weavers  out  of  work;  and  in  1848  he  migrated 
to  America  with  his  wife  and  two  sons.  Making  their  way  to 
Pittsburg,  where  they  had  relatives,  Carnegie  found  work  in  the 
old  Blackstock  cotton-mill  on  Robinson  Street,  Allegheny  City ; 
and  young  Andy  presently  joined  him  there  as  bobbin  boy  at 
$1.20  a  week. 

They  lived  in  a  little  black  frame  house  which  stood  in  the 
rear  of  what  is  now  336  Rebecca  Street,  Allegheny — a  district 
then  known  as  Slabtown  and  later  as  Barefoot  Square.  The 
mother  eked  out  her  husband's  earnings  by  taking  in  washing; 
and  her  evenings  were  spent  in  binding  boots  for  the  father  of 
Henry  Phipps,  who  lived  next  door  but  one. 

A  little  later,  when  young  Andy  was  fourteen,  he  got  a 
position  in  the  bobbin-turning  shop  of  John  H.  Hayes,  on 
Lacock  Street,  at  $3  a  week.  His  duties  were  to  fire  a  furnace 
in  the  cellar  with  wooden  chips  and  to  assist  in  running  a 
small  engine.  Later  he  was  made  bill  clerk  of  the  factory,  and 

13 


14         "A  MOST  HAZARDOUS  ENTERPRISE" 

left  when  he  was  fifteen  to  become  a  messenger  boy  for  the 
Ohio  Telegraph  Company.  Here  he  learned  telegraphy,  be- 
came an  operator,  and  was  taken  in  1854,  when  he  was  nineteen 
years  of  age,  into  the  service  of  Thomas  A.  Scott,  then 
superintendent  of  the  western  division  of  the  Pennsylvania 
Railway  Company. 

A  year  later,  in  September,  1855,  the  father  died.  The 
house  in  Rebecca  Street  in  which  he  lived  had  been  purchased 
out  of  his  savings ;  and  this  he  left  to  his  wife,  who  afterward 
sold  it  for  $1,500. 

During  the  next  few  years  young  Carnegie  engaged  in 
various  outside  enterprises,  and  through  the  aid  of  his  chief, 
Mr.  Scott,  often  made  money  in  them.  Indeed,  during  this 
fruitful  period  of  his  career,  before  he  learned  that  "  pioneering 
don't  pay,"  he  appears  to  have  been  ready  to  go  into  any  scheme 
that  was  brought  to  his  notice.  Besides  the  Woodruff  Sleeping 
Car  Company  and  the  Columbia  Oil  Company,  in  both  of  which 
Mr.  Scott  gave  him  an  interest,  and  which  are  known  to  have 
been  the  basis  of  his  fortune,  he  had  interests  in  a  scheme  for 
building  telegraph-lines  along  the  Pennsylvania  Railroad,  in  a 
construction  company,  in  a  project  for  establishing  a  sutler's 
business  in  soldiers'  camps,  in  a  horse-trading  concern  in  con- 
nection with  General  Eagan  for  the  supply  of  cavalry  mounts 
to  the  Government,  in  a  bridge-building  company,  in  a  locomo- 
tive works,  in  the  Duck  Creek  Oil  Company,  in  the  Birming- 
ham Passenger  [horse-car]  Railroad,  the  Third  National  Bank, 
the  Pittsburg  Grain  Elevator,  the  Citizens'  Passenger  Railroad, 
the  Dutton  Oil  Company,  and  probably  other  ventures  forgotten 
by  himself  and  all  who  knew  him.  By  1863,  the  date  of  his 
entry  into  this  story,  when  he  was  twenty-eight,  he  had  made 
quite  a  little  money,  and  had  been  promoted  to  Scott's  position 
as  local  superintendent,  with  offices  at  the  Outer  Depot,  Pitts- 
burg.  His  brother  Tom,  some  nine  years  his  junior,  was  his 
assistant. 

As  boys,  Andrew  Carnegie  and  Thomas  N.  Miller  had  be- 


THE    ORIGINAL    SIX 


longed  to  a  group  which  called  itself  The  Original  Six.  This 
also  included  William  Cowley,  who  has  been  mentioned,  James 
R.  Wilson,  who  reappears  later,  James  Smith,  and  John  Phipps. 
The  last-named  was  Henry  Phipps'  brother,  who  died  in  youth. 
The  Original  Six  took  walks  in  the  country  together,  met  at 
/each  other's  homes,  and  some  of  them  belonged  to  a  singing- 
class  conducted  by  Ludwig  Koethen,  the  lawyer,  choir-master, 
and  assistant  pastor  of  the  Swedenborgian  Church,  of  which 
all  the  Carnegies  were  members.  Henry  Phipps,  being  four 
years  younger,  belonged 
to  another  group,  which 
included  Tom  Carnegie, 
Henry  W.  Oliver,  and 
Robert  Pitcairn. 

Andy,  as  he  was 
generally  called,  was 
looked  up  to  by  the  rest 
of  the  boys  because  he 
was  older  than  any  ex- 
cept Miller,  who  was 
three  months  his  senior, 
and  because  of  an  as- 
sertiveness  in  his  man- 
ner which  the  boys  interpreted  as  evidence  of  fitness  for 
leadership.  It  was  therefore  not  unnatural  that  both  Miller  . 
and  his  young  friend  Phipps  should  submit  to  him  their 
difficulties  with  Kloman.  Miller,  in  particular,  left  his  inter- 
ests in  the  hands  of  Carnegie,  whom  he  held  as  his  dearest 
friend.  They  had  been  the  previous  year  in  Europe  together, 
where  Miller  had  tended  him  in  a  long  and  dangerous  illness. 
He  had  also  tried  to  induce  Kloman  to  admit  Carnegie  into 
their  partnership ;  but  Kloman  would  not  hear  of  it.  So  that 
in  many  ways  Carnegie's  selection  as  peacemaker  was  appro- 
priate. It  was  in  this  strange  guise  that  Dame  Fortune,  having 
already  gently  tapped  several  times  at  Carnegie's  door,  now 


Some  of  them  belonged  to  a  Singing-Class." 


i6 


'A    MOST  HAZARDOUS   ENTERPRISE 


began  a  regular  tattoo ;  but  so  busy  was  he  with  his  little 
schemes  that  many  years  passed  before  he  realized  the  meaning 
of  the  noise. 

Carnegie's   efforts   in  the  interests   of  harmony  produced 
nothing  but  fresh  discord,  until  at  length  he  decided  upon  the 


ANDREW   CARNEGIE. 


GEORGE  LAUDER. 
Taken  in  Glasgow.  1862. 


THOMAS  N.   MILLER. 


1  elimination  of  the  chief  cause  of  trouble  by  ousting  Miller  him- 
self. This  was  not  his  avowed  intention;  but  it  was  the  result 
of  his"  method  of  restoring  peace.  A  new  partnership  agree- 

\      ment  was    drawn    up,    dated    September  1st,    1863,  in   which 


THE   FIRST  " EJECTURE"  17 

Miller,  in  lieu  of  four-ninths,  was  given  one-sixth,  and  made 
a  special  partner.  The  capital  of  the  company,  now  known  as 
Kloman  &  Phipps,  was  to  be  $60,000,  and  was  to  run  for  six 
years  and  four  months ;  but  there  was  a  clause  reading : 

"  But  if  at  any  time  during  the  term  aforesaid  the  said 
Kloman  and  Phipps  shall  desire  to  terminate  the  same  as  to  the 
said  special  partner,  then  upon  the  said  Kloman  and  Phipps 
giving  to  the  said  Thomas  N.  Miller  sixty  days'  notice  in  writ- 
ing, and  jointly  signed,  of  their  desire  to  that  effect,  the  interest 
of  him,  the  said  Thomas  N.  Miller,  shall  at  the  end  of  said 
sixty  days,  and  upon  the  payment  to  him  of  the  capital  invested 
by  him  and  share  of  profits  coming  to  him,  or,  in  case  of  loss,  of 
the  total  amount  of  capital  still  remaining  due  to  him,  retire 
from  said  firm,  and  his  interest  therein  shall  at  that  time  wholly 
cease,  and  the  same  shall  in  such  case  accrue  to  the  said  Henry 
Phipps,  Jr.,  as  having  a  pre-emption  right  thereto,  upon  his 
paying  in  the  capital  for  the  purchase  thereof. " 

This  agreement  was  signed  by  all  the  parties,  Miller  adding 
to  his  signature  a  protest  "against  the  sixty  days." 

In  the  course  of  a  few  months  fresh  disputes  occurred,  and 
Miller  was  served  with  the  sixty  days'  notice  of  expulsion. 

Upon  this  Andrew  Carnegie  and  his  brother  Thomas  M. 
Carnegie  both  drew  up  written  and  signed  statements  of  their 
connection  with  the  quarrel ;  and  in  these  appears  for  the  first 
time  the  fact  that  Tom  Carnegie  had  been  admitted  into  the 
partnership  with  money  which  his  brother  had  furnished,  and 
that,  in  addition,  to  quote  from  Andrew's  statement :  "  In  the 
event  of  Miller's  ejecture  one-half  of  this  interest  would  fall  to 
my  brother."  This  was  the  way  in  which  the  Carnegies  first 
went  into  the  iron  business. 

In  regard  to  the  merits  of  the  dispute  itself,  it  is  impossible 
after  this  lapse  of  time  to  unravel  the  tangled  evidence.  The 
suspicions  and  vacillation  of  Kloman  seem  to  have  contributed 
more  than  anything  else  to  the  quarrel.  First  he  wished  to  be 
rid  of  his  brother.  Succeeding  in  this,  he  became  desirous  of 
sacrificing  Phipps  in  order  to  regain  the  lost  balance  of  power. 


i8 


"A   MOST  HAZARDOUS  ENTERPRISE" 


Finally,  he  preferred  to  force  out  Miller,  probably  realizing 
that  his  greater  financial  strength  made  Miller  more  dangerous 
than  Phipps,  who,  beyond  his  small  salary,  had  nothing  but  his 
interest  in  this  firm.  The  elder  Carnegie  says  in  his  statement 
that  Kloman  was  alarmed  lest  Miller  and  Phipps  should  have  a 
controlling  interest.  "  A  violent  quarrel  ensued,  and  the  par- 
ties were  embittered  toward  one  another.  Finding  Miller  ob- 
stinate and  determined  Mr. 
Klowman  eventually 
thought  Phipps  would  be 
more  desirable  as  a  member 
of  the  firm;  and  they  be- 
came friendly  disposed  as 
the  breach  widened  between 
Miller  and  Klowman.  For 
some  weeks,"  adds  Carne- 
gie, "  scarcely  a  day  passed 
that  I  did  not  see  one  or 
more  of  the  parties.  Hear- 
ing both  sides,  I  was  fully 
satisfied  I  could  not  estab- 
lish harmony  upon  the  basis 
of  a  common  partnership. 
I  finally  got  all  "three  to- 
gether in  my  office  and  pro- 
posed that  Miller  should 
have  his  one-third  interest 
and  be  a  silent  (not  special)  member,  Phipps  and  Klowman 
transacting  the  business.  This  was  agreed  to;  but  unfortu- 
nately ill  feeling  was  created  about  a  trifle,  the  result  aimed 
at  was  lost,  and  the  conference  separated  under  angrier  feelings 
than  ever.  Time  only  served  to  increase  the  violence  of  the 
quarrel."  After  making  reference  to  Miller's  having  stopped 
the  Fort  Wayne  payments,  Carnegie  continues  :  "  But  I  con- 
sidered it  so  essential  to  Miller's  standing  that  the  notice 


THOMAS  N.   MILLER. 

First  partner  of  Kloman  and  Phipps,  and 
with  them  the  founder  of  what  afterwards 
became  the  Carnegie  Steel  Company. 


THE  RUDIMENTARY  "IRON-CLAD"  19 

[i.e.,  the  advertisement  denying  his  partnership]  be  recalled,  as 
enemies  were  not  wantin-g  who  began  circulating  slanderous 
reports  about  his  clandestine  arrangement  with  Klowman  while 
acting  as  agent  of  the  Fort  Wayne  Road,  that  I  insisted  upon 
Miller  agreeing  to  anything  that  would  reinstate  him  in  the 
eyes  of  the  public  as  a  legitimate  member  of  the  Klowman 
concern." 

This  was  the  weakness  of  Miller's  position ;  but  it  need  not 
have  been  fatal  to  it,  since  he  had  bought  Anthony  Kloman's 
interest  openly  and  in  his  own  name.  It  is,  indeed,  impossible 
to  resist  the  thought  that  Andrew  Carnegie  compromised  his 
friend  by  giving  serious  attention  to  the  puerile  objections  of 
Kloman.  Some  of  these,  as  quoted  by  Carnegie  himself,  are  so 
childish  that  one  is  astonished  at  their  influence  on  Carnegie. 
Kloman  "told  me,"  he  writes,  that  he  "found  such  a  [special] 
partner  might  possibly  create  trouble  by  insisting  upon  coming 
into  the  mill,  sitting  in  the  office,  talking  to  the  men,  etc.,  but 
more  especially  he  was  afraid  Miller  might  involve  the  firm  in 
some  way,  or  attempt  to  do  so,  for  revenge,  or  might  insist 
upon  withdrawing  his  share  of  the  profits  at  inconvenient  times, 
etc.  To  cover  these  objections  I  suggested  that  Miller's  good 
behavior  might  be  secured  by  a  clause  giving  the  other  part- 
ners the  right  to  eject  him  upon  notice,  provided  the  fears 
expressed  were  realized.  This  was  accepted  and  the  present 
papers  executed. " 

Having  reached  this  extraordinary  settlement  with  Kloman, 
Carnegie  telegraphed  his  brother  to  write  Miller  that  he  must 
accept  it,  as  otherwise  "  the  position  in  which  I  [Andrew  Car- 
negie] would  be  placed  would  be  that  of  an  agent  whose  acts 
were  disavowed  by  his  principal,  and  this  would  be  the  first 
time  during  my  life  in  which  I  had  been  so  placed." 

Miller  therefore  accepted  the  settlement  under  protest,  and 
allowed  his  interest  to  be  cut  down  to  what  it  was  before  the 
purchase  of  Anthony's  stock,  and  to  hold  even  this  interest 
only  on  sufferance  of  his  partners, 


H 


\ 


•     J  S 

•1        J     c 


MILLER'S    CABBAGE   PATCH  21 

The  incident  closed  for  the  time  being,  after  Miller  had 
accepted  his  expulsion  and  allowed  his  capital  to  be  put  in  the 
name  of  T.  M.  Carnegie  as  trustee.     Thenceforward  it  was  a  \ 
partnership  between  Kloman,  Phipps,  and  the  younger  Carnegie. 

Even  before  the  narratives  of  this  quarrel  were  written — 
August  5th,  1864 — Miller  had  quietly  paid  $400  to  a  gardener 
named  Cumming,  as  compensation  for  five  acres  of  half-grown 
cabbages  which  he  destroyed  to  make  room  for  a  rival  mill  at 
Thirty-third  Street,  Pittsburg,  only  four  blocks  from  the  Klo- 
man-Phipps  Iron  City  Forges.     The  lease  bears  date  of  July 
1st,    1864.      In  this    venture    Andrew    Carnegie,   despite  his  ] 
brother's  interest  in  the  Kloman  mill,  had  a  large  share.     The  i 
list  of  organizers  also  included  the  names  of  Aaron  G.  ShifHer  / 
and  J.  L.    Piper,  who  had  bridge-building  works  near,  which  . 
were  to  be  supplied  with  iron  from  the  new  mill.     There  were 
also  the  names  of  John  C.   Matthews  and  Thomas  Pyeatte  on  ' 
the  association  papers  when  these  were  published  on  October 
1 4th,  1864.     Pyeatte  was  the  bookkeeper  of  the  concern,  and 
Matthews  was  manager.     The  Cyclops  Iron  Company  was  the  ' 
name  given  to  the  new  organization ;  and  the  mill  was  designed 
to  be  the  best  in  Pittsburg.      None  of  the  men,  however,  except 
Matthews,   had  had  any  practical   experience;  and   Matthews 
was  handicapped  by  the  ambitious  plans  of  his  associates,  who, 
he  used  to  complain,  "wanted  him  to  build  a  $400,000  mill  on 
a  $100,000  capital. "     The  principal  construction  was  230  feet 
long  and   80  feet  wide.     The  building  and  equipment  of  the 
works  occupied  all  winter;  and  when,  in  the  spring,  the  ma- 
chinery was  started,  the  structure  was  found  too  weak  for  its 
safe  operation. 

Tom  Carnegie  had  watched  with  grave  concern  his  brother's 
connection  with  this  enterprise ;  and  when  his  forebodings  of 
disaster  seemed  about  to  be  realized  he  urged  Andrew  to  seek  a 
union  with  the  Kloman  firm,  so  as  to  have  the  benefit  of  the 
German's  mechanical  experience  and  skill  in  remodelling  the 
Cyclops  Mill.  Andrew,  as  was  his  wont  when  facing  trouble, 


CARNEGIE   REPROACHES   HIS   LUCK          23 

laughed  at  his  brother's  anxiety,  but  decided  to  follow  his  ad- 
vice. Overcoming  Miller's  objection  to  an  alliance  with  his 
recent  opponents,  Carnegie  authorized  his  brother  to  open  nego- 
tiations with  Kloman  and  Phipps  for  a  consolidation  of  interests. 

In  the  meantime  the  Twenty-ninth  Street  mill  had  been 
successful  beyond  all  expectation ;  and  at  the  beginning  of  1865 
its  capital  was  raised,  to  keep  pace  with  its  earning  power, 
from  $60,000  to  $150,000.  The  proposal  for  union  with  the 
discredited  Cyclops  concern  was  naturally  received  by  Kloman 
and  Phipps  with  coldness ;  but  Tom  Carnegie  had  a  persuasive 
manner,  and  he  made  liberal  offers.  Finally  it  was  agreed  that 
Andrew  Carnegie  and  his  group  should  turn  over  the  Cyclops 
Mill  and  a  lump  sum  of  $50,000,  to  be  divided  among  the 
Kloman  partners,  in  return  for  a  little  less  than  half  of  the 
shares  of  a  new  company,  of  which  Andrew  Kloman  was  to  be 
manager.  This  was  done;  and  on  May  ist,  1865,  the  Union 
Iron  Mills  Company  was  organized  with  a  capital  of  half  a 
million  dollars.  Thenceforward  the  two  mills  were  known  as 
the  Upper  and  Lower  Union  Mills,  and  are  so  known  to-day. 

Andrew  Carnegie's  disappointment  at  the  outcome  of  this 
venture  was  carefully  concealed  at  the  time ;  but  he  gave  expres- 
sion to  it  a  couple  of  years  later  in  a  letter  full  of  reproaches 
which  he  sent  to  Miller.  "  I  knew  you  had  previously  been 
wronged,"  he  wrote,  "  and  felt  you  could  not  forget  it.  I  did 
what  I  could  at  the  time  to  redress  the  wrong  and  went  into  the 
most  hazardous  enterprise  I  ever  expect  to  have  any  connection 
with  again,  the  building  of  a  rival  mill."  And  so,  regarding  it 
as  a  "most  hazardous  enterprise,"  Andrew  Carnegie  found 
himself  fortuitously  and  complainingly  thrust  upon  a  road  which 
was  to  lead  him  to  a  fortune  of  $250,000,000. 

The  Cyclops  Mill  was  built  on  five  acres  of  land  leased  from 
the  Denny  estate,  which  paid  $5,000  to  recover  the  leases  held 
by  the  market-gardener  whose  cabbages  Miller  dug  up  to  make 
room  for  his  foundations.  The  annual  rental  was  $2,000  for 
twenty-one  years,  with  a  right  of  renewal  for  a  similar  term  at 


24         "A    MOST  HAZARDOUS  ENTERPRISE" 

the  rate  which  should  be  found  current  in  the  neighborhood. 
In  1884  the  Dennys  ascertained  that  rentals  of  adjoining  prop- 
erty had  increased  fifteen-fold  in  twenty  years.  So  they  de- 
manded $25,000  a  year  for  the  old-time  cabbage-patch,  but 
finally  accepted  $12,000.  Additions  have  been  made  from  time 
to  time  to  the  original  five-acre  tract  by  purchase  and  by  filling 
in  the  river  front,  until  the  Upper  Union  Mills  now  cover  eight 
acres. 


PITTSBURG. 

The  Allegheny  River  on  the  reader's  left,  the  Monongahela  on  the  right.  They 
form  the  Ohio  at  their  junction.  The  first  Kloman  forge  was  at  the  (left)  end  of  the 
furthest  bridge  up  the  Allegheny,  seen  in  the  above  illustration.  The  second  Kloman 
forge  was  almost  opposite,  on  the  Pittsburg  side  of  the  river. 


Plate 


HENRY  PHIPPS,  ANDREW  CARNEGIE  AND  JOHN  VANDEVORT 

TAKEN    IN    1865    DURING    A    WALKING    TOUR    IN    ENGLAND 


CHAPTER    III 

EARLY   STRUGGLES   AND   SUCCESSES 

THE  war  of  the  rebellion  was  draw- 
ing to  a  close  when  the  consolida- 
tion  of  the  two  mills  took  place. 

« r 

At  once  the  demand  tor  govern-' 
ment  supplies  ceased;  and  it  be- 
came necessary  not  only  to  find 
new  markets,  but  to  make  other 
kinds  of  goods  than  the  Kloman 

mill  had  been  producing.  This  was  no  easy  matter ;  and  the 
difficulty  was  increased  by  the  need  for  finding  an  outlet  for 
the  products  of  the  new  mill.  Mr.  Phipps  says  that  business 
runs  wonderfully  easily  when  it  gets  in  a  groove.  But  in  the 
beginning  there  are  no  grooves;  and  the  paths  of  trade  for 
the  Union  Iron  Mills  had  to  be  created. 

With  the  carelessness  of  youth  Phipps  gave  little  thought 
to  the  making  of  trade-grooves  for  the  new  company ;  but  hav- 
ing just  received  his  first  large  sum  of  money,  he  thought 
the  time  had  come  for  a  great  and  glorious  holiday.  Andrew 
Carnegie  shared  the  idea;  and,  accompanied  by  John  Vande- 
vort,  they  went  to  Europe  on  a  nine  months'  walking  tour, 
leaving  Kloman  in  charge  of  the  Lower  Mill,  with  Matthews, 
under  his  supervision,  to  manage  the  Upper  Mill.  Tom  Car- 
negie was  to  help  in  such  ways  as  he  could.  Miller,  who  was 
now  the  largest  individual  owner,  took  no  active  part  in  the 
direction  of  affairs;  but  he  occasionally  made  the  firm  an 
advance  of  ready  money.  For  it  soon  became  evident  to  these 
young  men,  venturing  in  untried  fields  and  with  conditions  of 
trade  undergoing  a  sudden  and  radical  change,  that  the  finan- 

25 


26 


EARLY  STRUGGLES  AND    SUCCESSES 


cing  of  their  operations  was  going  to  be  difficult.  Recalling 
this  time,  Miller  long  afterward  used  to  express  his  wonder, 
not  only  at  their  audacity,  but  at  their  luck.  "  It  is  no  credit 
to  any  of  us  that  we  did  not  'bust  '  twenty  times,"  he  used  to 
say. 

As  the  weeks  grew  into  months  the  ever-increasing  financial 

x  pressure  developed  in  Tom  Carnegie  a  resourcefulness  which  he 
himself  had  never  suspected, 
and  was  a  constant  surprise 
to    those    who    had  known 
him    only    as  his  brother's 
assistant.     He    had   a  win- 
ning personality,  and  made 
friends   even    when    asking 
a   favor.      His    nature    was 
broadly     human ;     and     he 
found  a  point  of  sympathetic 
contact     in     everybody     he 
touched.     The  conviviality 
which     his      more    austere 
brother  afterwards  so*  freely 
condemned    had  a    positive 
monetary  value  during  these 
trying  times,  when  the  tour- 
ists in  Europe  were  discuss- 
ing cathedral  architecture  and  falling  into  bewildered  rapture 
over  the  beauties  of  the  blossoming  heather.      If  the  situation 
was  saved  for  the   Union  Iron  Mills  Company,  it  was  due  to 
Kloman's  mechanical    genius    and  Tom   Carnegie's  ability  to 
make  friends  and  then  promptly  to  convert  them  into  cash. 

Despite   all   this,   it   is   doubtful  if  the   firm  had   survived 
the  return  of  the  holiday-makers  had  it  not  been  for  the  lucky 

-  speculation  in  oil  which  Miller  had  made  in  1862,  the  returns 
from  which  enabled  him  repeatedly  to  come  to  the  company's 
rescue.  "  A  friend  in  need  is  a  friend  indeed,"  Tom  would  say 


'Discussing  cathedral  architecture.' 


COSTLY  BLUNDERS  27 

to  Miller  by  way  of  preface  when  asking  for  a  couple  of  thou- 
sands to  meet  the  wage-roll  on  Saturdays. 

Then  Kloman  had  his  troubles.  The  new  mill  was  even 
more  faulty  in  construction  than  he  had  supposed ;  and  large 
sums  were  needed  for  alterations.  Mr.  Phipps  says  it  had 
almost  to  be  rebuilt.  Andrew  Carnegie,  in  his  reproachful  let- 
ter to  Miller,  says :  "We  had  to  spend  at  least  $30,000  on  the  * 
Upper'Mills  to  remedy  blunders. "  Rarely,  indeed,  has  a  great 
enterprise  been  started  under  such  hopeless  conditions;  and 
had  it  been  known  how  hopeless  they  were,  it  is  likely  that  the 
partners  would  have  given  up  the  struggle  in  despair  and  gone 
back  to  their  bookkeeping  and  their  telegraph  instruments. 

Presently   the   tide  turned.     The  railroads  throughout  the 
South  were  being  rebuilt,  the  West  was  opening  up,  the  Union  • 
Pacific  was  under  way,  and  a  general  revival  of  the  iron  trade   • 
took  place.     Tom   Carnegie  had  the  benefit  of  the  ripe  experi- 
ence and  solid  judgment  of  William  Coleman,  a  pioneer  in  the   . 
Pittsburg  iron  business,  whose  daughter  he  was  hoping  to  wed. 
Under  Mr.  Coleman's  direction  the  energies  of  the  firm  were 
directed  into  the  channels  which  Kloman  had  partially  known 
before  the  .war;    and   the  boom   in   railroad-building  came  in 
time  to  save  the  Union  Mills.     In  addition,  a  new  outlet  for  • 
their  product  was  opened  through  the  connection  which  Andrew 
Carnegie  had  formed  with  the  bridge-building  firm  of  Piper  & 
Shiffler,  afterwards  known  as  the  Keystone  Bridge  Company. 
This  concern  now  bought  all  its  shapes  and  most  of  its  struct- 
ural material  from  the  Union  Iron  Mills ;  and  soon  the  altera- 
tions which  Kloman  made  in  the  Upper  Mills  enabled  him  to 
roll  beams  large  enough  for  bridge  purposes. 

In  the  spring  of  1866  Phipps  and  the  elder  Carnegie  re- 
turned from  their  European  trip ;  and  the  former  at  once  assumed 
financial  management  of  the  company,  thereby  taking  upon  him- 
self a  burden  which  never  left  him  for  twenty  years.  In 
these  days  of  mammoth  financial  operations  we  are  so  accus- 
tomed to  see  tens  and  even  hundreds  of  millions  raised  for  this, 


28         EARLY  STRUGGLES  AND   SUCCESSES 

that,  or  the  other  purpose,  that  it  is  difficult  to  conceive  of  the 
greatest  constituent  company  of  a  billion-dollar  organization 
having  trouble  to  find  money  to  pay  the  wages  of  its  workmen. 
But  Phipps  had  years  of  such  experiences;  and  more  than  once 
the  men  were  obliged  to  accept,  in  lieu  of  wages,  orders  for 
groceries  on  a  local  store.  An  amusing  circumstance  is  recalled 
to  illustrate  the  chronic  nature  of  this  effort  to  do  business 
without  adequate  capital. 

Mr.  Phipps  had  an  old  black  mare,  Gypsy,  which  he  used  to 
drive  from  one  bank  to  another.  This  old  horse  made  the 
rounds  so  often  that  it 

would    stop   of    its    own  , 

accord  whenever  it  came 
to  a  bank;  and  it  would 
make  a  diagonal  line 
across  Wood  Street  from 
the  Citizens'  National  to 
the  First  National,  and 
then  on  to  the  Third  Na- 
tional, stopping  before 
each  bank  and  quietly 

"A  diagonal  line  across  Wood  Street." 

waiting  until  Mr.  Phipps 

had  arranged  for  the  day's  necessities.      It  was   impossible  to 

drive  this  old  horse  in  a  straight  line  on  Wood  Street. 

The  president  of  one  of  the  old  Pittsburg  banks  recently 
said  to  the  present  writer  concerning  those  times  :  "  What  we 
used  to  admire  in  young  Phipps  was  the  skilful  way  in  which 
he  could  keep  a  check  in  the  air  for  two  or  three  days." 

For  a  while  financial  conditions  became  easier ;  but  before 
Mr.  Phipps  had  grown  accustomed  to  the  change  a  fresh  strin- 
gency arose  through  an  unwise  incursion  into  a  new  field. 

There  was  a  pipe-works  adjoining  the  Lower  Mill,  and  some 
one  suggested  to  Andrew  Carnegie  that  it  would  be  a  good 
thing  to  buy  this  property;  it  would  round  out  their  holdings, 
besides  providing  them  with  a  new  market  for  their  iron.  The 


-  CARNEGIE'S    OFFER    TO    SELL    OUT  2Q 

plan  commended  itself  to  the  elder  Carnegie,  who  was  always 
on  the  alert  for  new  uses  for  the  product  of  the  mill;  but  Tom, 
who  often  served  as  a  balance-wheel  to  his  brother's  over-san- 
guine temperament,  and  who,  moreover,  had  had  some  personal 
experience  of  the  difficulty  of  financing  a  growing  business 
with  a  stationary  capital,  strongly  opposed  it,  and  showed  that 
the  sort  of  iron  used  in  the  pipe-works  was  not  the  kind  the 
Union  Mills  produced.  His  opposition  was  nevertheless  over- 
ruled. "Tom  was  born  tired,"  Andy  used  to  say  in  excuse 
of  what  he  considered  his  brother's  lack  of  enterprise.  So  the 
pipe-works  were  acquired  at  a  cost  of  $36,000;  and  soon  af- 
terwards they  were  burned  down  while  only  partially  insured. 
The  loss  in  cash  amounted  to  $25,000;  but  Mr.  Phipps  used 
to  say  that  this  was  offset  by  the  advantage  of  being  rid  of  a 
white  elephant,  and  by  the  comfort  of  $i  1,000  insurance  money 
in  the  till. 

Despite  the  prosperous  condition  of  the  iron  trade  at  this 
time — the  difference  between  pig-iron  and  rolled  bars  was  still 
about  $50  a  ton — the  loss  on  the  pipe-works,  joined  to  that 
resulting  from  the  faulty  construction  of  the  Upper  Mill,  gave 
a  very  discouraging  aspect  to  the  balance-sheet  of  the  company. 
Indeed,  the  scanty  profits  of  the  first  three  years  hardly  redeemed 
the  enterprise  from  failure.  While  there  was  no  actual  deficit 
there  was  practically  no  profit — none  at  all,  in  fact,  if  due  allow- 
ance be  made  for  depreciation  of  the  plant ;  and  Andrew  Car- 
negie expressed  a  desire  to  get  out  of  the  business  at  any 
price.  Writing  to  Miller  on  September  4th,  1867,  he  says: 
"  I  want  to  get  out  of  them  [the  Union  Iron  Mills],  and  will  do 
so  before  long.  Even  if  I  can't  sell  my  stock  it  can  go."  And 
he  adds  that  "  $27.40  per  share  will  be  very  gladly  received." 
As  he  then  held  1,600  shares,  he  would  thus  have  received 
$43,840  for  his  entire  interest. 

It  is  proper  to  state  that  the  letter  from  which  this  quota- 
tion is  made  was  part  of  an  effort  to  get  Miller  to  sell  out  of 
the  Union  Iron  Mills  Company.  In  the  fall  of  1867  the  old 


30         EARLY   STRUGGLES  AND    SUCCESSES 

quarrel  had  broken  out  afresh.  Indeed,  Miller,  from  the  date 
of  the  consolidation,  had  consistently  refused  to  sit  on  the 
board  of  directors  with  his  former  opponents;  and  against 
Phipps  in  particular  he  cherished  grievances  that  hampered  the 
harmonious  working  of  the  new  organization.  And  now,  to 
make  matters  worse,  a  dispute  occurred  between  him  and  the 
elder  Carnegie,  concerning  some  shares  in  the  Columbia  Oil 
Company  which  the  latter  had  sold  him  "  at  cost,"  but  which 
Miller  had  reason  to  believe  had  yielded  Carnegie  a  profit  of 
over  three  hundred  per  cent.  The  actual  facts  of  this  trans- 
action have  never  been  ascertained;  but  in  1896,  when  Miller 
officially  came  into  possession  of  the  old  books  of  the  Columbia 
Oil  Company,  he  found  on  the  minutes  the  original  record  of 
Andrew  Carnegie's  purchase  of  some  treasury  stock  at  $2  a 
share,  and  a  protest  of  other  shareholders  against  it.  As  Miller 
paid  Carnegie  $6.37^  a  share  for  similar  stock — probably  not 
the  same — he  felt  that  he  had  been  justified  in  his  criticisms 
of  Carnegie.  He  later  sold  this  stock,  which  had  cost  him 
$637.50,  for  $72,000,  after  receiving  many  large  dividends 
which  enabled  him  to  make  the  loans  to  Tom  Carnegie  for  the 
Union  Iron  Mills  Company. 

Naturally  this  double  dispute  made  Miller's  position  in  the 
company  untenable ;  and  he  set  out  to  find  some  one  to  buy  him 
out.  Carnegie  offered  to  help  him ;  and  the  letters  he  then 
wrote  show  the  poor  regard  in  which  he  held  the  enterprise. 
In  one  he  states  that  on  his  return  from  Europe  he  had  "  found 
the  Union  Iron  Mills,  in  my  opinion,  going  as  fast  as  they  could 
into  bankruptcy  "  ;  and  he  estimates  (1867)  "  the  mills  as  worth 
(or  as  costing  exclusive  of  the  large  sums  paid  to  repair  defect- 
ive mill)  $300,000.  When  we  pay  off  $37,602.29  of  debt," 
adds  Carnegie,  "they  will  be  worth  that."  A  month  later  he 
writes :  "  Profits  are  not  quite  $30,000  " — after  running  two 
years  and  five  months.  "  Our  whole  thing  to-day  could  be  re- 
placed for  $250,000,  and  we  still  owe  a  good  deal  upon  it.  I 
could  not  recommend  the  purchaser  to  pay  more  than  $27.50  for 


FOREIGN  WORKMEN  IMPORTED 


it  per  share.  I  would  like  to  get  rid  of  my  own  at  that 
figure." 

The  purchaser  here  referred  to  was  supposed  by  Miller  to 
be  David  A.  Stewart ;  but  when  the  sale  was  finally  made  the 
buyer  proved  to  be  Andrew  Carnegie  himself.  The  price  paid 
was  $32  a  share  for  2,300  shares.  These  included  the  holdings 
of  Matthews  which  Miller  had  previously  bought.  In  this  way 
Andrew  Carnegie  increased  his  holdings  to  thirty-nine  .per  cent 
of  the  total  number  of  outstanding  shares. 

The  lack  of  harmony  in  the  council-chambers  of  the  Union 
Iron  Mills  was  reflected  at  the  works ;  for  about  this  time  a 

strike  occurred  among  the 
puddlers.  In  an  unex- 
pected, and  even  a  roman- 
tic, way  this  strike  brought 
about  changes  that,  in  the 
end,  benefited  the  firm  to 
the  extent  of  millions  of 
dollars,  and  did  much  to 
put  it  in  the  van  of  pro- 
gressive iron-workers. 

At  this  date  the  Am- 
algamated Union  did  not 
exist ;  but  there  were  sep- 
arate trade  associations  for 
each  class  of  labor.  The 
puddlers  were  strongly  or- 
ganized under  the  title  of 
the  Sons  of  Vulcan.  By 
reason  of  falling  prices  a 
demand  had  been  made 

on  the  puddlers  in  the  Pittsburg  district  to  accept  a  reduction 
of  wages.  This  being  refused,  a  lockout  resulted;  and  the 
firm  had  its  first  fight  with  labor.  It  was  not  a  very  serious 


'A  large  number  of  foreigners  were  brought 
over." 


32         EARLY  STRUGGLES  AND   SUCCESSES 

one,  for  sympathetic  strikes  were  then  unknown ;  and  the  rest 
of  the  men  in  the  mills  continued  to  work  as  long  as  the 
material  on  hand  lasted  or  fresh  supplies  could  be  had. 

During  the  summer  of  1867  the  manufacturers  affected  by 
the  strike  raised  a  fund  and  sent  to  Europe  for  workmen  to 
take  the  places  of  the  refractory  puddlers.  There  being  no 
contract  labor  law  to  prevent  it,  a  large  number  of  foreigners 
were  engaged  and  brought  over.  They  were  of  all  kinds  and 
many  nationalities.  Some  Germans  who  could  not  speak  Eng- 
lish were  allotted  to  the  Union  Iron  Mills  because  Andrew 
Kloman,  being  a  German  himself,  could  easily  control  and 
direct  them.  It  is  interesting  to  note  that  it  was  not  these 
drastic  measures  that  broke  the  strike;  for  the  increasing 
boom  in  the  iron  trade  soon  absorbed  the  labor  of  all,  at  wages 
even  higher  than  before. 

Among  the  Germans  sent  to  Kloman  was  one  named  John 
Zimmer,  a  bright,  capable  fellow,  who  knew  not  only  his  own  * 
business  but  that  of  the  next  man.  After  he  had  been  a  little 
time  in  the  works,  he  described  to  Mr.  Kloman  a  mill  that  he 
had  worked  on  in  Germany,  on  which  it  was  possible  to  roll  • 
plates  of  various  widths  having  well-finished  rolled  edges. 
Such  plates  were  unknown  in  America.  The  mill  described  by  , 
Zimmer  consisted  of  a  pair  of  horizontal  rolls  similar  to  the 
ordinary  plate-mill  then  in  use,  but  having  in  addition  two 
movable  vertical  rolls  that  could  be  opened  or  closed  at  the 
will  of  the  operator.  Mr.  Kloman  was  at  once  struck  with  the 
value  of  the  improvement,  especially  for  rolling  material  for 
bridge  orders;  and  with  Zimmer 's  aid  he  erected  the  first  Ger- 
man mill  in  the  country.  This  is  the  machine  now  known  in 
the  trade  as  the  Universal  Mill.  It  was  capable  of  rolling  plates 
from  seven  to  twenty-four  inches  wide,  and  from  tjiree-six- 
teenths  to  two  inches  in  thickness,  with  rolled  edges.  From 
the  first  day  this  mill  was  a  mechanical  success,  and  was  the 
forerunner  of  several  improved  mills  of  the  same  character 
afterwards  erected  at  the  Upper  Mill  and  at  Homestead.  In' 


33 

deed,  the  great  slabbing-mill  which  was  erected  at  Homestead 
in  1888  was  a  lineal  descendant  of  the  little  Zimmer  mill  built 
in  1867-68  at  Kloman's.  This  slabbing-mill  now  turns  out 
thirty  thousand  tons  of  steel  slabs  a  month;  and,  as  it  has 
steadily  increased  its  production  from  year  to  year,  it  seems 
probable  that  its  limit  has  not  been  reached  even  yet.  Before 
its  erection  the  average  weight  of  an  ingot  that  could  be  used 
to  make  plates  direct  was  about  one  ton ;  whereas  ten-  and 
fifteen-ton  ingots  are  now  rolled  down  to  a  thickness  of  four  to 
six  inches,  then  cut  while  red-hot  into  the  lengths  needed  at  the 
plate-mill. 

This  little  idea  of  the  German  workman  has  been  worth 
millions  of  dollars  to  the  firm  that  imported  him  to  take  the 
place  of  a  striker.  As  for  Zimmer  himself,  his  reward  was  a 
well-paid  position  as  foreman  of  the  mill  he  erected  and  of  its 
improved  successors.  He  accumulated  a  competence,  and  was 
believed  to  be  possessed  of  upwards  of  one  hundred  thousand 
dollars  before  he  died. 

Despite  the  vaunted  progressiveness  of  the  American  manu- 
facturer, these  machines,  open  to  the  inspection  of  anybody  who 
passed  through  the  Union  Mills,  were  but  slowly  adopted  by 
other  firms.  Even  Andrew  Carnegie,  after  twenty  years'  experi- 
ence of  the  excellencies  of  the  German  mill,  in  consonance 
with  his  dictum,  "  Pioneering  don't  pay,"  opposed  the  erection 
of  the  slabbing-mill  at  Homestead ;  although  he  afterwards  be- 
came an  enthusiastic  admirer  of  its  work.  The  Carnegie  works 
to-day  have  still  the  most  perfect-running  Universal  mills  in 
the  country ;  and  there  is  not  another  slabbing-mill  in  the  world 
to  compare  in  power,  size,  and  efficiency  with  that  at  Home- 
stead. Within  five  miles  of  Homestead,  one  of  the  largest 
plate-mills  in  the  country  is  producing,  from  the  ingots  which 
it  necessarily  uses,  not  more  than  one-third  the  product  of  a 
similar  mill  at  Homestead,  which  works  up  the  slabs  made  on 
the  giant  descendant  of  the  little  Zimmer  mill. 

In  the  larger  sphere  now  open  to  it  Kloman's  inventive 
3 


34         EARLV  STRUGGLES  AND    SUCCESSES 

genius  found  free  scope.  Even  in  the  early  days  of  the  Lower 
Mill  he  perfected  many  devices  that  resulted  in  improved 
output  and  increased  economies.  Here  he  invented  a  machine 
for  "upsetting"  the  ends  of  eye-bars,  which  had  previously 
been  made  by  forging  and  welding.  At  the  Upper  works  he 
put  in  a  twenty-inch  beam-mill,  the  first  ever  built  in  Pittsburg 
that  was  planed  and  fitted  complete,  the  rough  casting  style 
having  been  the  rule ;  and  on  this  were  rolled  the  first  beams 
made  in  Pittsburg.  He  also  erected  the  first  Siemens  re- 
generative gas-heating  furnace  in  Pittsburg.  He  invented  a 
machine  for  straightening  and  bending  beams,  channels,  etc., 
cold;  and  the  disc-saw  for  cutting  beams,  etc.,  cold,  was  first 
introduced  by  him.  In  designing  rolls  for  unusual  shapes  he 
showed  a  rare  capacity.  Indeed,  his  ingenuity  in  this  line  of 
work  was  unequalled  by  any  master  mechanic  in  the  country, 
and  made  his  connection  with  the  Union  Mills  valuable  beyond 
compute.  Naturally  he  won  the  admiration  of  the  men  under 
him,  who  were  well  qualified  to  recognize  his  powers ;  and  his 
associates  reposed  entire  confidence  in  his  ability,  gave  him  a 
free  hand  in  the  works,  and  cordially  sustained  him  in  his  pro- 
gressive methods. 

As  financial  director  of  the  Union  Iron  Mills  Company  Mr. 
Phipps  did  not  limit  his  duties  to  supervising  accounts,  bank- 
ing transactions,  and  the  mere  routine  work  of  the  office.  He 
went  into  the  mill  and  watched  the  men  at  work,  studied  the 
machinery,  and  familiarized  himself  with  all  the  details  of  manu- 
facture. Then  he  wandered  into  other  works,  and,  comparing 
methods  and  results,  suggested  improvements  and  economies  in 
his  own.  The  spirit  of  enterprise  that  sanctioned  the  Zimmer 
experiment  led  him  to  institute  scientific  tests  of  structural 
material ;  and  he  was  one  of  the  first  in  his  line  of  business  to 
call  in  the  aid  of  the  chemist.  He  was  ever  seeking  to  get 
the  cost-line  of  mill  productions  to  the  lowest  point  consistent 
with  the  quality  required  by  the  structural  engineer.  To  his 
;  never-ceasing  watchfulness  are  largely  due  the  great  economies 


MR.  P  HIP  PS'    INGENUITY  35 

in  production  which  placed  his  firm  always  beyond  the  reach  of 
competition. 

On  one  of  his  trips  abroad  Mr.  Phipps  was  passing  through 
a  mill  in  Germany  when  he  noticed  that  the  piles  made  ready 
for  the  heating-furnace,  to  be  used  for  rolling  "  I  "  beams,  con- 
tained more  than  double  the  amount  of  scrap-iron  rails  used  in 
^ittsburg.  He  quietly  made  a  sketch  of  the  pile,  and  on  his  re- 
turn gave  orders  to  change  the  piles  at  the  Union  Iron  Mills  to 
correspond  with  his  sketch.  He  then  had  the  resultant  product 
tested,  and,  finding  that  the  economy  still  left  the  factor  of 
safety  unimpaired,  made  the  change  permanent.  The  cost  of 
this  trip  to  Europe  was  saved  almost  daily  thereafter  to  his 
firm. 

Another  great  economy  was  effected  by  Mr.  Phipps  in  1872- 
1873.  In  the  quiet,  unobtrusive  manner  in  which  he  habitually 
worked,  he  made  a  long  series  of  observations  at  the  two  mills 
and  then  did  a  little  careful  figuring.  After  cautiously  verify- 
ing his  conclusions,  he  announced  to  his  partners  that  at  a  cost 
of  one-third  the  price  for  which  he  believed  he  could  sell  the 
Lower  Mill,  he  could  enlarge  the  Upper  Mill  so  as  to  make  its 
product  equal  to  that  of  both.  The  saving  in  cost  of  manage- 
ment and  in  the  handling  of  material  he  reckoned  would  exceed 
$25,000  a  year,  a  sum  equal  to  five  per  cent,  on  their  capital. 
His  partners,  who  had  learned  to  trust  his  instinct  for  economies, 
offered  no  objection  to  the  plan  except  the  difficulty  of  finding 
a  purchaser  for  the  Lower  Mill.  This  difficulty  Mr.  Phipps 
solved  with  his  habitual  originality :  he  got  up  a  company  to 
buy  it !  At  the  same  time  he  brought  in  a  new  influence  which 
eventually  became  of  great  value  to  the  concern.  This  was  his 
brother-in-law,  Mr.  John  Walker. 

At  this  time  Mr.  Walker  was  entirely  without  experience 
in  the  iron  trade ;  but  he  had  had  a  good  commercial  training 
under  his  father.  Endowed  with  an  extraordinary  memory,  he 
quickly  mastered  the  details  of  his  new  business,  and  in  the 
course  of  time  he  became  a  compendium  of  facts  and  dates,  tq 


_,     a; 


a  S 


ENTRY  OF  JOHN    WALKER  37 

whom  his  colleagues  referred  for  information  of  all  kinds  bear- 
ing on  their  business.  Cautious  in  his  undertakings  and  con- 
servative in  his  methods,  he  had  the  confidence  of  the  local 
bankers;  and  his  financial  connections  were  invaluable  to  his 
firm  and  to  Carnegie,  Phipps  &  Co.  when  he  afterwards  became 
chairman  of  that  concern.  Of  studious  habits  and  logical  cast 
of  mind,  he  showed  his  independence  and  intellectual  honesty 
by  openly  combatting  the  protectionist  theory  ac  a  time  when 
this  was  held  by  his  associates  as  the  rankest  treason.  The 
same  frank  spirit  was  shown  in  all  the  relations  of  his  business 
life ;  and  he  had,  in  an  exceptional  degree,  the  confidence  and 
even  affection  of  his  partners  and  others  with  whom  he  was 
associated. 

With  Mr.  Walker  as  a  consenting  nucleus,  Mr.  Phipps  pro- 
ceeded with  the  creation  of  a  company  to  buy  the  Lower  Union 
Mill.  The  firm  of  Berry,  Courtney  &  Wilson,  which  had  been 
a  large  purchaser  of  iron  from  Mr.  Phipps'  company,  was  on  the 
eve  of  dissolution ;  and  no  difficulty  was  found  in  persuading  its 
most  active  member,  Mr.  John  T.  Wilson,  to  join  Mr.  Walker. 
The  firm  of  Wilson,  Walker  &  Co.  was  thus  formed ;  and  at 
once  it  bought  the  business  and  patents  of  Berry,  Courtney  & 
Wilson  for  $50,000.  Half  of  this  sum  coming  to  Mr.  Wilson, 
he  put  his  $25,000  into  the  new  company.  Andrew  Carnegie 
added  $60,000  as  a  silent  member  of  the  firm;  and  the  rest  of 
the  $200,000  capital  was  subscribed  by  John  Walker,  Alexander 
Leggate,  and  Howard  Morton.  The  two  last  named  soon  with- 
drew from  the  firm.  The  old  Kloman  Iron  City  Forge,  with  its 
little  Zimmer  mill,  the  four  puddling-furnaces,  now  increased  to 
fifteen,  its  six  heating-furnaces,  four  hammers,  and  five  trains 
of  rolls,  was  now  turned  over  to  Wilson,  Walker  &  Co.,  and  the 
Union  Iron  Mills  Company  concentrated  itself  upon  the  Upper 
Union  Mills.  As  makers  of  bar-iron,  railroad-car  forgings  and 
plates,  the  firm  of  Wilson,  Walker  &  Co.  ran  as  an  independent 
concern  until  1886,  when  it  once  more  became  part  of  the 
Phipps  organization  by  inclusion  in  the  firm  of  Carnegie, 


38         EARLY  STRUGGLES  AND   SUCCESSES 

Phipps    &    Co.,    Limited,   at   a   valuation    of   $340,000    above 
$87,000  mortgage. 

In  regard  to  the  Upper  Mill,  even  greater  economies  than 
those  foreseen  by  Mr.  Phipps  resulted  from  the  change  described. 
When  the  additions  were  made  they  were  prudently  designed  for 
heavy  work ;  and  soon  the  company  was  rolling  all  sizes  of  beams 
up  to  fifteen  inches  for  structural  purposes,  all  kinds  of  channels 
up  to  fifteen  inches,  almost  innumerable  sizes  of  angles,  tees,  Z 
bars,  and  other  structural  shapes,  and  universal  plates  on  two 
large  and  improved  Zimmer  mills,  of  which  the  enterprising 
German  was  placed  in  charge.  By  1881,  when  the  Union  Iron 
Mills  were  taken  into  the  consolidation  of  various  properties 
under  the  name  of  Carnegie  Brothers  &  Co.,  Limited,  the  origi- 
nal long  building  had  been  surrounded  by  nine  others,  some 
almost  equal  to  it  in  length.  They  contained  one  eight-inch 
train  of  rolls,  one  twelve-inch  train,  an  eighteen- inch  muck-train, 
an  eighteen-inch  scrap-train,  a  rotary  squeezer,  all  operated  by 
five  large  horizontal  engines.  There  were,  moreover,  nine 
Siemens  furnaces,  one  Swindell  furnace,  twenty-one  puddling- 
furnaces,  two  reverberatory  furnaces,  besides  extensive  ma- 
chine-shops full  of  costly  tools.  The  plant  was  taken  into  the 
consolidation  at  a  valuation  of  $630,000.  As  the  Lower  Mill 
was  sold  to  Wilson,  Walker  &  Co.  for  $230,000,  it  thus  appears 
that  the  plant  had  increased  in  value  seventy-two  per  cent,  in 
sixteen  years. 


CHAPTER    IV 
IRON   RAILWAY   BRIDGES 

THE  Keystone  Bridge  Company,  to  which  ref- 
erence has  been  made,  was  formed  on  April 
25th,  1865,  with  a  capital  of  $300,000. 
The  list  of  organizers  included  the  names 
of  Aaron  G.  Shiffler,  J.  L.  Piper,  Andrew 
Carnegie,  Walter  Katte,  and  James  Stewart. 
Its  purpose,  as  stated  in  its  prospectus,  was 
"  the  prosecution  on  an  extensive  scale  "  of  the  business  of  man- 
ufacturing and  erecting  patent  iron  bridges  "  for  railways,  canals, 
common  roads,  streets,  &c.,  &c.  Also  wire  suspension  bridges, 
ornamental  bridges  for  parks  and  cities,  pivot  and  draw  bridges 
for  roads,  canals  and  railways,  .  .  .  built  according  to  plans  and 
specifications,  as  may  be  desired. " 

The  company  is  said  further  to  have  "  purchased  the  exten- 
sive Bridge  Works  of  Messrs.  Piper  and  Shiffler,  located  in  the 
Ninth  Ward  of  the  City  of  Pittsburgh,  Pa.,  with  the  right  for 
the  United  States  to  manufacture  and  erect  the  celebrated  Iron 
Railway  Bridges  under  the  'Linville  &  Piper'  Patents,  and 
'Piper's  Patent'  Wooden  Bridges  and  Roof  Frames." 

The  works  are  described  as  having  ample  facilities  "  for  the 
extensive  contracts  now  in  progress,  and  will  be  increased  as 
rapidly  as  found  expedient,  in  order  to  complete  promptly  the 
most  extensive  structures." 

"  The  ofBcers  who  superintend  the  manufacture  and  erection 
of  all  structures  "  are  said  to  be  "  practical  men,  with  extensive 
and  varied  experience,  acquired  in  pursuing  successfully,  for 
many  years,  the  business  of  constructing  and  erecting  Iron  and 
Wooden  Railway  Bridges,  Roofs  and  Buildings. 

39 


40  IRON  RAIL  WA  Y  BRIDGES 

"  These  Iron  Bridges  have  been  in  constant  use  on  the  Great 
Pennsylvania  Central  Rail  Road  and  its  dependencies  and  con- 
nections, for  many  years.  The  great  Iron  Railway  Bridge  over 
the  Ohio  River  at  Steubenville,  Ohio,  with  spans  varying  from 
210  feet  to  320  feet  was  erected  by  this  Bridge  Company,  in 
accordance  with  the  prescribed  plans  and  specifications 

"The  success  of  the  'Linville  &  Piper  '  Patent  Bridges  has 
been  unprecedented ;  for  many  years  they  have  borne  without 
visible  defect  or  deterioration,  the  immense  traffic  of  the  Penn- 
sylvania Central  Rail  Road,  Philadelphia  and  Erie  Rail  Road, 
Northern  Central  Railway,  Junction  Rail  Road,  and  others. 
Miles  of  wooden  bridge  superstructure  have  been  replaced  by 
permanent  iron  structures,  by  the  superintending  officers  of  this 
Company,  without  detention  to  the  business  of  the  roads.  No 
single  instance  of  failure,  either  in  materials  or  workmanship, 
has  yet  been  reported." 

Mr.  W.  H.  Wilson,  chief  engineer  of  the  Pennsylvania  Rail- 
road, writing  from  Altoona  on  July  2ist,  1865,  says : 

"  Messrs.  J.  L.  Piper  and  A.  G.  Shiffler  have  been  engaged 
for  the  last  eight  years  under  my  personal  observation,  and  for 
some  years  previously,  in  erecting  bridges  for  the  Pennsylvania 
Rail  Road  Company.  The  wooden  bridges  have  generally  been 
on  the  'Howe '  plan;  the  iron  bridges  have  been  constructed 
in  the  shops  of  the  Company,  from  plans  prepared  by  the  Engi- 
neer Department,  some  of  them  of  boiler  plate,  but  most  of 
them  on  the  ' Pratt'  plan  of  truss,  with  modifications  intro- 
duced at  various  times.  All  the  work  of  raising  and  completing 
these  bridges  has  been  performed  by  Messrs.  Piper  and  Shiffler 
in  the  most  satisfactory  manner.  It  affords  me  pleasure  to 
recommend  them  as  unsurpassed  for  promptness,  energy  and 
skill  by  any  builders  with  whom  I  have  had  business  relations." 

It  thus  appears  that  Piper  and  Shiftier  had  been  extensively 
engaged  in  building  bridges  of  wood  and  iron  for  at  least  eight 
years  prior  to  the  formation  of  the  Keystone  Bridge  Company. 
Andrew  Carnegie,  however,  in  his  account  of  the  business, 
speaks  as  though  it  originated  with  the  Keystone  Bridge  Com- 


42  IRON  RAILWAY  BRIDGES 

pany,  which  he  represents  as  his  personal  creation.  In  a  short 
biography  which  he  recently  published  through  the  S.  S. 
McClure  Newspaper  Syndicate,  he  says : 

"  There  were  so  many  delays  on  railroads  in  those  days  from 
burned  or  broken  wooden  bridges  that  I  felt  the  day  of  wooden 
bridges  must  end  soon,  just  as  the  day  of  wood-burning  locomo- 
tives was  ended.  Cast  iron  bridges,  I  thought,  ought  to  replace 
them,  so  I  organized  a  company,  principally  from  railroad  men 
I  knew  to  make  these  iron  bridges,  and  we  called  it  the  Key- 
stone Bridge  Company.  Development  of  this  company  required 
my  time,  so  I  resigned  from  the  railroad  service  in  1867." 

Mr.  Carnegie  has  an  excellent  verbal  memory;  but  he  is 
especially  prone  to  error  when  recalling  events.  He  is,  in  fact, 
constantly  mistaking  impressions  for  occurrences,  as  in  this 
case.  That  it  is  his  memory  which  is  here  at  fault  is  shown  by 
a  further  error  in  the  same  biography.  Speaking  of  his  entry 
upon  the  manufacture  of  Bessemer  steel  he  says : 

"  On  my  return  from  England  [he  is  speaking  of  the  year 
1868]  I  built  at  Pittsburg  a  plant  for  the  Bessemer  process  of 
steel-making,  which  had  not  until  then  been  operated  in  this 
country,  and  started  in  to  make  steel  rails  for  American  railroads." 

First  noting  that  the  construction  of  the  first  Carnegie  Bes- 
semer steel  plant  was  not  commenced  until  April,  1873,  and  was 
not  in  operation  until  the  end  of  August,  1875,  it  may  be  seen 
by  reference  to  any  cyclopedia  that  the  first  Bessemer  steel  pro- 
duced in  America  was  made  at  Wyandotte,  Michigan,  in  1864, 
and  that  the  first  Bessemer  steel  rails  made  in  America  were 
rolled  at  the  North  Chicago  Rolling  Mill  in  presence  of  the 
American  Iron  and  Steel  Institute  in  May,  1865,  from  ingots 
made  at  Wyandotte.  Some  of  these  rails  were  laid  in  the  track 
of  one  of  the  railroads  running  out  of  Chicago ;  and  were  still 
in  use  ten  years  afterwards  when  the  Carnegie  firm  made  its 
first  Bessemer  steel.  Even  if  Mr.  Carnegie's  recollection  had 
been  correct  as  to  the  date  of  this  visit  to  England,  it  would 
still  be  at  fault  in  respect  to  the  beginnings  of  Bessemer  steel 


PIPER'S  MECHANICAL    GENIUS  43 

rails  in  America;  for  there  were  produced  no  less  than  7,225 
tons  of  such  rails  in  America  in  1 868.  The  prosaic  fact  is  that 
the  earliest  of  the  Carnegie  steel  enterprises  was  the  eleventh 
in  America  instead  of  the  first  to  use  the  Bessemer  process. 

In  themselves  these  discrepancies  are  of  little  moment.  It 
is  probable  that  not  one  reader  in  a  hundred  would  notice  them ; 
but  the  author  deems  it  his  duty  to  the  exceptional  reader  to  set 
forth  the  facts  as  he  finds  them.* 

The  Keystone  Bridge  Company,  then,  was  simply  the  incor- 
porated business  of  Messrs.  Piper  and  ShifBer.  Carnegie,  / 
through  his  official  position  on  the  railroad,  had  long  been 
familiar  with  their  work;  and  he  had  known  Piper  since  1858, 
when  the  latter  was  employed  for  a  time  in  the  car  shops  at 
Altoona,  where  Carnegie  then  lived. 

Piper  was  a  mechanical  genius  who  was  always  inventing 

*  The  author  has  taken  such  pains,  by  reference  to  original  documents,  to  t 
establish  the  dates  of  every  salient  event  in  the  history  of  the  Carnegie  Steel 
Company,  that  he  ventures,  even  at  the  risk  of  being  thought  unduly  insistent,  to 
point  out  a  further  error  of  fact  into  which  Mr.  Carnegie  has  fallen  through  over- 
confidence  in  his  memory.  In  itself  the  matter  is  trivial  ;  but  it  may  have  a  value 
in  the  determination  of  other  questions  of  fact  which  may  arise. 

In  the  same  biography  Mr.  Carnegie  says:  "  For  my  father,  who  had  been 
naturalized  as  an  American  citizen  in  1853,  nad  died  soon  afterwards.  ...  At 
the  age  of  sixteen  I  was  the  family  mainstay." 

The  facts,  as  shown  by  the  Allegheny  county  records  on  file  in  the  Pittsburg 
Court  House,  are  as  follows: — On  September  I4th,  1855,  the  father  of  Andrew 
Carnegie  made  a  will,  bequeathing  a  house  and  lot  in  Allegheny  City  to  Margaret 
Carnegie,  his  wife.  Andrew  was  then  within  ten  weeks  of  being  twenty  years  of 
age.  This  will  was  recorded  on  March  3Oth,  1858,  when  Andrew  wras  in  his 
twenty-third  year. 

As  regards  "the  family  mainstay,"  the  facts  are  as  follows:  During  the 
first  of  young  Andy's  working  years,  his  wages  were  $1.20  a  week,  or  $62.40  for 
the  year.  At  Lacock's  he  got  $3  a  week,  or  $156  for  the  year.  Next  he  earned 
$3-5°.  °r  $182  a  year.  Thus,  at  sixteen ,  years  of  age,  his  total  earnings  had 
amounted  to  about  $400,  or  one- quarter  as  much  as  his  father  had  invested  in  the 
little  home  at  the  time  of  his  death. 

But  the  elder  Carnegie  did  not  die  until  Andrew  had  almost  reached  his 
twenty-first  birthday  ;  and  he  worked  until  within  a  few  weeks  of  his  death.  In 
the  year  of  his  father's  death  Andrew  Carnegie's  salary  was  $35  a  month  ;  but  he 
lived  away  from  home  and  had  hardly  more  than  sufficed  for  his  own  necessities. 
Even  after  this  his  mother  kept  a  railway  lodging-house  near  Twenty-Eighth  Street, 
Pittsburg,  where  Robert  Pitcairn,  his  successor  on  the  Pennsylvania  Railroad,  was 
one  of  her  lodgers. 


44  IRON  RAILWAY  BRIDGES 

things.  One  of  his  patents,  still  remembered  by  his  associates 
of  that  day,  was  a  turn-table  for  locomotives ;  and  he  afterwards 
embodied  some  of  the  ideas  it  contained  in  a  drawbridge.  He 
also  devised  an  improved  bridge-post  which  was  extensively 
used;  and  there  were  other  things  invented  in  conjunction  with 
Linville,  who  was  bridge  engineer  for  the  Pennsylvania  Railroad, 
and  later  became  president  of  the  Keystone  Bridge  Company. 
He  was  a  man  of  impressive  appearance,  a  physical  giant,  and 
earnest  and  convincing  in  manner.  At  the  same  time  he  was 
of  singular  trustfulness.  One  of  the  stories  still  current  of  Tom 
Carnegie's  ready  wit  bears  on  this  trait  of  Piper's. 

The  Keystone  Bridge  Company  enjoyed  certain  rebates  or 
discounts  from  the  card  rates  of  the  Union  Iron  Mills  Com- 
pany, from  which  it  bought  most  of  its  material.  One  time 
when  the  price  of  iron  had  risen,  the  discounts  were  omitted 
from  the  bill  rendered  to  the  Keystone  Company,  and  the  word 
"  net  "  appeared  in  their  place.  "  What  does  that  mean,  Tom  ?  " 
asked  Piper  as  he  indicated  the  word  "  net."  Piper,  like  most 
simple  characters,  loved  a  bargain;  and  Tom,  knowing  this, 
hesitated  to  mention  the  withdrawal  of  discounts.  So  he  an- 
swered with  his  characteristic  readiness,  "  Oh  that  ?  That's 
'nit. '  It  means  that  there's  nothing  to  be  added  !  "  The  reply 
satisfied  Piper,  and  he  made  no  objection  to  the  payment  of  the 
bill. 

Shiffler,  the  other  founder  of  the  business,  had  worked  with 
Piper  in  a  contractor's  gang  under  the  firm  of  Stone,  Quigley 
&  Co.  on  the  Pennsylvania  lines  prior  to  1857.  This  was 
the  period  referred  to  by  Chief  Engineer  Wilson,  when  he 
said  he  had  known  them  "for  some  years  "  prior  to  1857  while 
"erecting  bridges  for  the  Pennsylvania  Rail  Road."  Here 
they  got  the  experience  which  made  their  firm  so  successful, 
and  qualified  them  for  the  direction  of  the  Keystone  Bridge 
Company  when  that  was  formed.  But  neither  of  them  origi- 
nated the  use  of  iron  in  bridges ;  for  this  material  had  been  so 
used  from  the  earliest  days. 


46  IRON  RAIL  WA  Y  BRIDGES 

The  first  iron  bridge  ever  attempted  was  at  Lyons,  France, 
in  1/55.  It  was  to  have  been  an  arch;  but  the  work  was  aban- 
doned, after  a  portion  of  the  iron  had  been  made,  because  of  its 

4  great  cost.  In  1/77-79  the  first  iron  bridge  was  built  by  Abra- 
ham Darby,  over  the  Severn  near  Colebrookdale,  in  Shropshire, 
the  place  taking  the  name  Ironbridge.  Its  form  is  that  of  an 
arch  of  i2O-foot  span  and  4 5 -foot  rise.  The  next  iron  bridge 
was  built  at  Wearmouth  in  Devonshire.  It  was  in  the  form  of 
a  segmental  arch  of  no  less  than  236-foot  span;  and  it  cost 
,£27,000.  In  Sunderland,  also  in  England,  a  bridge  was  built 
in  1796,  of  large  segments  of  cast  iron.  It  was  justly  consid- 
ered a  wonderful  achievement.  Affixed  to  it  was  the  motto  Nil 
despcmndum  auspice  Deo  ;  and  Sir  Lowthian  Bell  says  that  every 
traveller  to  the  north  of  England  considered  himself  bound  to 
visit  what  then  was  regarded  as  a  most  daring  example  of  me- 
tallic engineering.  In  France  the  iron  foot-bridge  across  the 
Seine  near  the  Louvre  was  built  in  1803  ;  and  during  the  ensu- 
ing fifty  years  many  other  iron  bridges  were  constructed  in 
Europe. 

With  these  examples   before  them  it  is  not   surprising  that 

x  American  engineers  adopted  iron  for  railroad  bridges  early  in 
the  history  of  steam  transportation.  As  early  as  1841  Squire 
Whipple,  called  the  father  of  American  iron  railroad  bridges, 
patented  an  iron  truss-bridge ;  though  even  he  was  not  the  first 
in  the  field.  It  is  said  that  Tom  Paine  built  an  iron  truss- 
bridge.  Be  this  as  it  may,  there  were  iron  bridges  spanning 
the  Erie  canal  as  early  as  1840;  and  by  1847  a  company — the 
New  York  Iron  Bridge  Company — had  been  formed  for  the  ex- 
clusive manufacture  of  such  structures.  A  bridge  built  by  this 
company  on  the  Harlem  Railroad  is  described  in  the  American 
Railroad  Journal  for  November  27th,  1847;  and  an'iron  Howe 
railroad  bridge  was  already  in  existence  on  the  North  Adams 
branch  of  the  Boston  and  Albany  Railroad,  a  few  miles  north  of 
Pittsfield,  in  April,  1847,  where  it  was  examined  by  Squire 
Whipple.  In  1848  Whipple  built  two  iron  bridges  on  the  Erie 


SOME  EARLY  EXAMPLES 


47 


Railroad;  in  1849  he  built  two  more  near  the  Chester  junction 
of  the  Newburgh  branch  of  the  Erie.  In  1852-53  the  first  iron 
railroad  bridge  of  considerable  span,  being  1 50  feet  to  centre 
of  bearings,  was  erected  on  the  Albany  Northern  Railroad  at 
the  crossing  of  the  Erie  canal  between  the  cities  of  Troy  and 


J.    L.    PIPER, 

Who,  with  Aaron  G.  Shiffler,  founded  the  Keystone  Bridge  Works. 

Cohoes.  It  stood  for  thirty  years,  and  was  removed  in  good 
condition  to  make  way  for  a  double-track  bridge.  A  bridge  of 
the  same  description  was  built  in  1854  for  the  Black  River  and 
Utica  Railroad  at  Utica.  In  1855  one  was  built  for  the  same 
road  at  Boonville,  Oneida  County.  During  the  decade  between 
1850  and  1860,  which  brings  us  to  the  time  of  Piper  and 


4  8  IRON  RAIL  WAV  BRIDGES 

Shiffler,  the  firm  of  S.  &  J.  M.  Whipple  alone  built  over  a  hun- 
dred iron  bridges  of  all  kinds  and  shapes.  In  1863  the  Detroit 
Iron  Bridge  Works  was  organized  into  a  joint  stock  company; 
and  its  prospectus  states  that  its  manager  had  "  for  some  years 
previous  been  engaged  in  the  construction  of  iron  bridges  for 
railways. " 

Thus,  so  far  from  being  the  pioneer  in  the  iron  railroad 
bridge  business,  Mr.  Carnegie  occupied  a  position  a  long  way 
down  the  list.  When  he  finally  did  become  interested  with 
Piper  and  ShifBer  it  was  not,  as  he  alleges,  in  "  cast-iron  bridges." 
When  cast  iron  was  in  vogue  for  bridge  structures  in  England, 
wood  was  used  in  America;  and  when  wood  was  replaced  with 
iron  it  was  wrought  iron,  and  later  Bessemer  steel,  that  was 
used.  The  only  parts  of  Piper  &  ShifBer's  bridges  that  were  of 
cast  iron  were  Piper's  patent  posts ;  and  these  were  a  very  small 
part  of  the  whole,  which,  of  course,  was  of  wrought  iron. 

It  is  also  worthy  of  mention  that  Andrew  Carnegie's  princi- 
pal interest  in  the  Keystone  Bridge  Company  was  given  to  him 
in  return  for  services  rendered  in  its  promotion.  He  paid  no 
cash  for  any  of  his  shares;  but  desiring  to  have  a  larger  hold- 
ing than  that  gratuitously  assigned  to  him,  he  gave  his  note  to 
the  company  in  payment  of  the  increased  interest,  and  the  first 
four  dividends  sufficed  to  liquidate  the  debt. 

It  is  possible  that  the  standards  of  commercial  morality 
were  as  high  forty  years  ago  as  they  are  to-day.  Business  men 
of  that  period  aver  that  they  were  higher.  It  is  none  the  less 
certain  that  the  ethics  of  railroad  management  in  early  days 
were  formed  after  other  standards  than  those  of  modern  times ; 
else  had  there  been  more  general  condemnation  of  the  fault 
which  Andrew  Carnegie  discovered  in  Miller's  "clandestine 
arangement  with  Klowman  while  acting  as  agent  of  the  Fort 
Wayne  Road."  Such  arrangements,  not  always  clandestine, 
seem  to  have  been  the  rule  in  those  days ,  and  the  early  history 
of  the  Carnegie  enterprises  affords  many  examples.  Despite 


EARLY  RAILROAD  MORALS  49 

the  fact  that  the  principal  business  of  the  most  important  of 
these  enterprises  was  the  manufacture  of  rails,  railway  struct- 
ures, and  railway  material  of  various  kinds,  it  was  from  the 
salaried  officials  of  railways  that  much  of  their  first  financial 
support  was  received.  Miller  did  not  sever  his  connection  with 
the  Fort  Wayne  road  when  he  built  the  Cyclops  Mill ;  nor  did 
Andrew  Carnegie  resign  from  the  Pennsylvania  when  he  joined 
him.  Indeed,  it  was  not  an  uncommon  thing  for  the  president 
and  vice-president  of  a  railroad  to  own  shares  in  a  corporation 
which  obtained  most  of  its  business  from  such  road.  No  doubt 
the  business  was  contracted  for  by  faithful  subordinates,  and 
was  honestly  and  properly  carried  out  by  the  contracting  com- 
panies; and  while  it  is  possible  that  no  question  of  morals  is 
involved  in  the  dual  allegiance  of  such  important  officials,  mod- 
ern opinion  would  unhesitatingly  condemn  it  as  a  breach  of  pro- 
priety and  good  taste. 

In  the  formation  of  the  Keystone  Bridge  Company  this  in- 
fraction of  modern  standards  was  especially  conspicuous;  al- 
though the  matter-of-fact  way  in  which  Mr.  Carnegie  speaks  of 
organizing  a  company  "principally  from  railroad  men"  shows 
that  he,  at  least,  had  no  idea  that  the  propriety  of  such  a  pro- 
ceeding might  be  questioned.  President  J.  Edgar  Thomson, 
however,  had  his  interest  appear  on  the  company's  books  in 
the  name  of  his  wife.  Besides  Colonel  Scott,  vice-president,  the 
Pennsylvania  Railroad  officials  who  became  stockholders  in 
the  Keystone  Bridge  Company  included  the  chief  engineer,  the 
assistant  general  superintendent,  the  superintendent  of  motive 
power  and  machinery,  and  Andrew  Carnegie,  the  superintend- 
ent of  the  Pittsburg  division  of  the  line.  There  were  also  the 
president  of  another  road,  two  chief  engineers,  and  a  general 
superintendent.  Carnegie  says  he  did  not  resign  his  position 
on  the  Pennsylvania  Railroad  until  1867,  two  years  after  the 
formation  of  the  Keystone  Bridge  Company ;  *  and  Mr.  Pitcairn, 

*  Another  error.  He  left  the  Penr  sylvania  Railroad  in  1865,  in  his  thirtieth 
year. 

4 


5o  IRON  RAIL  WA  Y  BRIDGES 

his  successor  on  the  railway,  afterwards  joined  the  Keystone 
board  of  directors. 

It  is  deserving  of  notice  that  most  of  these  gentlemen  wrote 
letters  of  recommendation  to  the  Keystone  Bridge  Company,  in 
which  the  work  of  Piper  and  Shiffler  was  spoken  of  in  the  most 
flattering  terms ;  and  these  were  published  by  the  company  as 
an  advertisement.  Here  for  example  are  those  from  Mr.  J. 
Edgar  Thomson  and  Colonel  Scott : 

PENNSYLVANIA  RAIL  ROAD  COMPANY 

President's  Office 
Philadelphia,  Sept.  25th,  1865. 

Messrs.  Piper  and  Shiffler,  who  will  hereafter  conduct  their 
business  of  Bridge  Builders  under  the  name  of  the  "  Keystone 
Bridge  Company,"  have  for  many  years  been  engaged,  both  as 
employees  and  contractors,  in  erecting  bridges  of  wood  and  iron 
on  the  Pennsylvania  Rail  Road  and  its  connections.  From  the 
uniform  success  that  has  attended  their  plans,  and  the  character 
of  the  work  executed,  I  have  no  hesitation  in  recommending 
them  to  the  patronage  of  the  officers  of  rail  road  companies,  for 
the  erection  of  these  structures,  either  upon  the  well  tested 
plans  they  have  been  building,  or  upon  such  as  may  be  pre- 
pared for  them.  Their  facilities  at  Pittsburgh  for  building 
bridges  will  enable  them  to  execute  work  with  dispatch. 

J.  EDGAR   THOMSON, 

President. 

PENNSYLVANIA  RAIL  ROAD  COMPANY 
.     Office  of  the  Vice  President 

Philadelphia,  July  28th,  1865. 

The  Keystone  Bridge  Company  for  several  years  past  have 
been  engaged  in  erecting  iron  and  wooden  bridges,  &c.,  for  the 
Pennsylvania  Rail  Road  Company  and  its  connecting  roads. 

I  have  had  ample  opportunities  for  observing  the  character 
of  their  structures,  and  can  cheerfully  testify  to  the  responsibil- 
ity and  skill  of  the  Company.  I  consider  the  iron  rail  road 
bridges  as  constructed  at  their  extensive  works,  in  Pittsburgh, 
Penn'a.,  the  best  that  I  am  acquainted  with. 

THOMAS   A.    SCOTT, 
Vice  President  Penn'a.  R.  R.  Co. 

With  such  powerful  backing  the  Keystone  Bridge  Company 
soon  became  one  of  the  most  important  factors  in  the  business 


SOME    GREAT  STRUCTURES  51 

of  bridge-building  in  the  country.  The  extent  of  the  work  it 
accomplished  was  officially  set  forth  in  1883,  when  it  was  stated 
that  the  bridges  built  by  it,  if  placed  end  to  end,  would  measure 
over  thirty  miles  in  length,  and  that  their  cost  exceeded 
$23,000,000. 

The  most  prominent  of  these  structures,  containing  in  each 


Copyright,  1902. 


THOMAS  A.   SCOTT, 

Who  gave  Andrew  Carnegie  his  start  and  many  a  subsequent  lift. 

case  the  longest  span  of  its  kind  then  in  existence,  are  the  fol- 
lowing : 

Steel  Arch. — The  Mississippi  River  bridge  at  St.  Louis, 
Mo.  ;  one  span  of  520  feet  and  two  spans  of  502  feet.  Double- 
track  and  double  deck  railway  and  highway  bridge. 

Steel  Truss. — The  Missouri  River  bridge  at  Plattsmouth, 
Neb.;  two  spans  of  402  feet  each.  Single-track  railway 
bridge  for  the  Burlington  and  Missouri  River  Railway.  Also, 
the  Ohio  River  bridge  at  Point  Pleasant,  W.  Va.,  3,805 


52  IRON  RAILWAY  BRIDGES 

feet  long ;  channel  span,  420  feet.     Single-track  railway  bridge 
for  the  Ohio  Central  Railway. 

Iron  Truss. — The  Ohio  River  bridge  at  Cincinnati,  O. ;  chan- 
nel span,  519  feet.  Single-track  railway  bridge  for  the  Cincin- 
nati Southern  Railway. 

Iron  Swing  Bridge. — One  span  of  472  feet,  over  Raritan 
Bay.  Single-track  railway  bridge  for  the  New  York  and  Long 
Branch  Railway. 

A  description  of  the  Keystone  Bridge  Works  published  by 
the  company  at  this  time  shows  that  they  "are  exclusively  de- 
voted tb  the  manufacture  of  bridge  and  structural  material,  fin- 
ished ready  for  erection.  The  shop  buildings  are  fireproof,  and 
cover  more  than  three  acres  of  ground,  and  the  capital  invested 
exceeds  $1,000,000.  The  company  employs  over  six  hundred 
men  at  these  works  and  over  three  hundred  and  fifty  in  the 
field,  engaged  in  the  erection  of  bridges,  so  that  the  total  num- 
ber of  men  on  its  pay  rolls  is  about  one  thousand.  The  works 
are  equipped  in  the  most  comprehensive  manner  with  special 
machines  and  tools  of  the  most  approved  type,  among  which 
may  be  mentioned  hydraulic,  pneumatic  and  power  riveting  ma- 
chines, a  i5O-foot  multiple  punch,  shears,  planers,  lathes,  steam 
hammers,  drilling  and  boring  mills,  rivet  and  bolt  making  ma- 
chines, and  a  3OO-ton  hydraulic  testing  machine.  The  works 
are  operated  day  and  night,  being  lighted  by  the  electric  light 
after  dark.  The  company  has  lately  made  extensive  and  costly 
additions  to  its  plant,  designed  solely  for  the  successful  and 
economical  working  of  steel,  it  having  become  evident  that  this 
material,  in  the  near  future,  is  destined  altogether  to  take  the 
place  of  iron.  These  additions  consist  in  a  gas  heating  furnace 
and  [Kloman's]  upsetting  machine  for  the  manufacture  of 
steel  eye-bars,  a  gas  annealing  furnace  54  feet  long,  the  only 
furnace  of  this  kind  so  far  built,  and  a  multiple  reaming 
machine." 

The  growth  of  the  plant  is  thus  seen  to  have  been  great, 
though  not  phenomenal.  The  position  of  the  company  at  the 


A    FINANCIAL    STATEMENT 


53 


beginning  of   1885  is  shown  in  the  following  abstract  from  its 
balance  sheet : 

Resources. 

Real  Estate $100,650.00 

Shop  Equipment  account 272,267.36 

Construction  account 345,942.43 

Sharpsburg  and  Lawrence  Br.  stock 1,100.00 

$719,959.79 

Available  accounts $229,724.39 

Overdue  account  (Pt.  Pleasant  Br.) 152,752.61 

Doubtful  accounts 2,964.48 

Amount  Inventory  account 299,098.33 

Cash 24,947.08 

$709,486.89 

Total  Effects $i ,429,446.68 

Liabilities. 

Due  Maury  Heirs  on  Mortgage . .  $50,000  .00 

"     Union  Iron  Mills  (C.  Bros.  &  Co) . . .  409,129.11 

"     Sundry  accounts 134,423.37 

Stock  account .$447,200.00 

Profit  and  Loss  a/c 388,694.20 

835,894.20 

$1,429,446.68 

Fourteen  years  later,  just  before  the  Keystone  Bridge  Com- 
pany became  part  of  the  United  States  Steel  Corporation,  its 
balance  sheet  for  1 899  showed  a  loss  of  over  $67,000  on  con- 
tracts. Its  principal  gains  came  from  castings  and  rivets ;  and, 
by  a  skilful  manipulation  of  its  "inventory  adjustment,"  the 
statement  was  made  to  show  a  slight  profit. 

Although  one  of  the  most  talked-about  branches  of  the  Car-1 
negie  business,  the  Keystone  Bridge  Works  was  one  of  the  least 
profitable,  and,  when  stripped  of  its  false  character  as  a  pioneer,  \ 
the  least  interesting  of  them  all. 


CHAPTER   V 
A   RIVALRY   OF   GREAT   FURNACES 

THE    Civil    War,    and 
the  great  demand  for 
iron  which  a  year  or 
two  later  followed  it, 
gave  a  great  impulse 
to  the  chief   industry    of    Pitts- 
burg  ;     and     during    the     years 
1866    to     1870    many    schemes 
were  laid  to  meet  the  great  local  demand  » 
for  pig-iron.      Up  to  that  time   the  lack 
of  ore  at  convenient  distances  had   han- 
dicapped the  smelting  industry ;  but  when  organized  transpor- 
tation   made    the    ores    of    Lake   Superior  accessible,   a  more  , 
promising  aspect  was  given  to  schemes  for  smelting  iron  in  \ 
Pittsburg  on  a  large  scale. 

In  the  fall  of  1870  two  of  these  projects  assumed  a  definite 
shape,  and  the  owners  of  the  Union  Iron  Mills  were  invited  to 
join  one  of  them.  This  was  the  project  of  a  number  of  iron  • 
manufacturers,  including  Lewis  Dalzell  &  Co.,  J.  Painter  & 
Sons,  Graff  Bennett  &  Co.,  Spang,  Chalfant  &  Co.,  Henry  W. 
Oliver  of  Oliver  Brothers  &  Phillips,  and  William  Smith,  owner 
of  a  large  pipe-foundry.  At  this  time  there  were  only  seven 
small  blast-furnaces  in  the  Pittsburg  district  with  a  total  prod- 
uct of  some  seventy  thousand  tons  a  year;  and  pig-iron  was 
selling  at  $40  a  ton. 

The  Union  Iron  Mills  were  large  consumers  of  pig-iron,  and 
the  scheme  was  not  without  attractions  to  Phipps  and  his  asso- 
ciates, especially  when  presented  by  the  most  important  firms 

54 


COLE  MAN'S   EXCELLENT  ADVICE  55 

in  the  business ;  and  after  consultation  among  themselves,  the 
partners  went  to  Mr.  William  Coleman  for  his  advice.  No  one 
was  more  fitted  to  give  the  young  men  wise  counsel,  for  no  one 
had  a  closer  knowledge  of  the  iron  trade  or  better  business 
judgment.  Mr.  Coleman  considered  the  matter  gravely,  as  was 
his  habit,  and  then  unhesitatingly  advised  against  joining  the 
combination.  He  pointed  out  that  if  the  members  of  the  Union 
Iron  Mills  Company  wanted  to  go  into  the  manufacture  of  pig- 
iron,  it  would  be  better  for  them  to  build  one  furnace  themselves 
than  to  own  one-seventh  of  two  furnaces  which  would  not  be 
under  their  control  or  management.  This  advice  was  accepted, 
and  the  decision  communicated  to  the  gentlemen  named,  who 
at  once  formed  the  Isabella  Furnace  Company,  and  started  to 
build  two  furnaces,  Later  they  added  a  third. 

On  December  ist,  1870,  Messrs.  Kloman,  Phipps,  and  the 
two  Carnegies  organized  the  firm  of  Kloman,  Carnegie  &  Co. ; 
and  when  the  winter  was  over  they  began  the  construction  of  a 
blast-furnace  at  Fifty-first  Street,  Pittsburg.  This  was  the 
first  Lucy  furnace,  so  called  after  the  wife  of  Thomas  M.  Car- 
negie, the  daughter  of  Mr.  Coleman,  as  the  Isabella  plant  was 
called  after  Mrs.  Herron,  the  sister  of  one  of  the  members  of 
the  firm  of  Spang,  Chalfant  &  Co.  Important  departures  were 
made  from  established  usages  in  American  blast-furnace  con- 
struction, and  many  English  ideas  were  utilized.  The  Clinton 
furnace  of  1859,  the  two  Eliza  furnaces  of  1861,  and  the  two 
Superior  furnaces  of  1862-63  were  all  forty-five  feet  high  and 
twelve  feet  in  diameter  at  the  boshes;  and  owing  to  the  ill-suc- 
cess of  the  fifteen-foot  furnaces  first  erected,  the  twelve-foot 
bosh  continued  to  be  the  favorite  dimension.  The  Struthers 
furnace  in  Ohio,  however,  was  fifty-five  feet  high,  with  sixteen 
feet  diameter  of  bosh ;  and  its  large  output — over  sixteen  hun- 
dred tons  of  iron  in  one  month — made  it  much  talked  about  in 
Pittsburg,  especially  as  this  result  was  achieved  with  raw  coal. 
The  English  idea  of  furnaces  of  large  capacity  thus  came  into 
favor ;  and  both  the  Lucy  and  Isabella  furnaces  were  made  sev- 


5  6  A   RIVALRY  OF  GREAT  FURNACES 

enty-five  feet  high,  the  former  with  twenty  feet  diameter  of  bosh, 
and  the  latter  with  eighteen,  afterwards  changed  to  twenty  feet. 
A  spirit  of  rivalry  sprang  up  between  the  two  concerns  from 
the  outset.  Isabella  No.  I  and  the  Lucy  went  into  blast  about 
the  same  time  in  the  early  summer  of  1872;  and  each  started 
out  by  making  50  tons  of  pig-iron  a  day,  which  was  a  fair  aver- 
age at  that  time.  Within  a  few  weeks  both  furnaces  increased 
their  output ;  and  by  the  end  of  the  year  the  Lucy  had  made 
13,361  tons,  an  average  of  nearly  500  tons  a  week,  notwithstand- 
ing a  chill  experienced  in  December.  The  Isabella  followed 
closely  and  produced  498  tons  in  a  single  week.  The  next  year 
the  Lucy  made  87  tons  in  a  day  and  578  tons  in  a  week.  Dur- 
ing the  early  part  of  1874  the  Lucy  kept  ahead,  and  in  Febru- 
ary produced  593  tons ;  but  by  August  she  was  overtaken  by 
the  Isabella's  612  tons.  In  October  the  Lucy  shot  ahead  with 
642  tons,  and  by  the  24th  of  that  month  the  Isabella  had  almost 
caught  up,  with  651  against  the  Lucy's  653.  On  that  day  the 
Lucy  for  the  first  time  produced  over  a  hundred  tons ;  and  the 
achievement  was  greeted  with  'loud  hurrahs  at  the  works,  and 
heard  of  with  incredulity  by  the  iron  trade.  On  November  2d 
the  Isabella's  output  for  the  week  was  672  tons,  and  the  follow- 
ing week  she  broke  all  records  with  702  tons.  On  December 
24th  she  made  1 1 2  tons.  Next  year  the  contest  between  Mana- 
ger Skelding  of  the  Lucy  and  Manager  Crowther  of  the  Isabella 
was  continued  as  fiercely  as  ever ;  and  in  October  the  former 
passed  his  rival  with  762  tons.  In  the  same  month  Isabella  No. 
2  crept  up  with  714  tons,  and  the  following  month  shot  ahead 
of  the  Lucy  with  77 1%  tons.  The  800  mark  was  not  crossed 
until  1878,  when  the  Lucy  made  804  tons  in  a  single  week.  In 
March,  1880,  she  made  945  tons,  and  this  was  beaten  by  the 
Isabella,  February,  1881,  with  1,000  tons.  The  trade  gasped 
with  astonishment,  and  editors  asked  :  "  What  will  these  Titans 
do  next  ? "  On  March  3<Dth  the  same  furnace  made  215  tons, 
and  next  day  217^  tons,  bringing  her  average  for  the  week  up 
to  1,130  tons.  In  April  she  made  1,282  tons,  and  in  October 


58  A    RIVALRY   OF  GREAT  FURNACES 

1,438  tons,  the  Lucy  dragging  behind  with  an  average  weekly 
output  of  about  1,000.  Mr.  Kennedy  then  joined  the  struggle 
with  a  new  furnace  at  Braddock  and  ran  the  Isabella  very  close. 
In  1883,  as  related  elsewhere,  he  shot  so  far  ahead  that  neither 
the  Lucy  nor  the  Isabella  was  in  the  race  until  he  himself  took 
the  management  of  the  Lucy  and  brought  her  daily  output  to 
over  300  tons.  But  even  this  record  was  beaten  again  and 
again  by  the  same  firm,  as  new  furnaces  were  put  in  operation, 
and  the  lessons  learned  by  earlier  experience  showed  managers 
what  to  avoid  and  what  to  practise. 

An  interesting  account  of  the  Lucy  Furnace  in  1873  was 
given  in  the  Iron  Age  of  that  date,  which  is  worth  quoting.  It 
is  as  follows : 

To  one  accustomed  to  the  methods  of  blast-furnace  construc- 
tion as  practised  east  of  the  Allegheny  Mountains,  the  Lucy 
Furnace  possesses  much  interest.  It  may  be  said  to  embody 
the  best  features  of  the  Western  practise,  both  in  construction 
and  management,  and  will  well  repay  a  visit  from  any  Eastern 
iron  master  who  may  find  himself  in  Pittsburg,  either  on  busi- 
ness or  pleasure.  The  furnace  is  located  on  the  bank  of  the 
Allegheny  River,  about  four  [two]  and  a  half  miles  from  the 
centre  of  the  city.  The  location  is  attractive  as  well  as  con- 
venient. From  the  top  of  the  stack  one  overlooks  a  little  valley 
of  unusual  beauty  on  the  one  side,  with  the  Isabella  furnaces  in 
the  distance  and  a  pretty  river  between ;  and  on  the  other  the 
suburbs  of  the  Iron  City,  overhung  with  its  cloud  of  black  smoke 
— not  beautiful,  indeed,  but  busy,  prosperous,  and  progressive. 
Switches  connect  the  stock-house  and  cast-house  with  the  Alle- 
gheny Valley  Railroad,  which  affords  easy  facilities  of  connec- 
tion with  the  Pittsburg  market  and  with  the  termini  of  the  vari- 
ous lines  of  transportation  by  which  ores  and  fuel  are  received. 

The  Lucy  Furnace  was  built  by  Messrs.  E.  J.  Bird  and 
William  Tate,  and  went  into  blast  in  May,  1872.  It  is  seventy- 
five  feet  high  by  twenty  feet  diameter  of  bosh.  Like  most  West- 
ern furnaces,  it  is  an  iron  cylinder  lined  with  fire-brick,  with  an 
independent  iron  gas-flue,  around  which  winds  an  iron  stairway, 
by  means  of  which  access  is  had  to  the  top  of  the  furnace.  The 
fuel  and  ores  are  carried  to  the  tunnel  head  in  barrows  by  means 
of  a  pneumatic  lift,  from  which  they  are  run  under  cover  of  an 
iron  roof  to  the  top  of  the  stack  and  dumped  by  hand.  In  its 


A   KLOMAN  NOVELTY  59 

external  appearance  the  furnace  is  neater  and  more  attractive 
than  the  stone  stacks  of  the  East,  and  in  many  respects  more 
convenient. 

The  machinery  of  the  works  is  of  the  best  quality,  though 
of  a  very  different  character  from  that  usually  seen  in  the  East. 
There  are  three  excellent  blowing  engines  by  Messrs.  Macin- 
tosh, HemphiU  &  Co.  of  Pittsburg,  and  four  pumping  engines 
to  raise  from  the  Allegheny  the  water  needed  about  the  furnace, 
by  Messrs.  Epping,  Carpenter  &  Co.,  Keystone  Pump  Works, 
Pittsburg.  The  locomotive  used  about  the  works  is  by  Messrs. 
Porter,  Bell  &  Co.  of  Pittsburg.  All  the  machinery  is  in  the 
best  condition,  being  comparatively  new  and  having  only  the 
most  careful  and  intelligent  management.  Steam  is  raised  by 
a  battery  of  eight  boilers,  each  sixty  feet  long  by  forty-three 
inches  in  diameter. 

The  capacity  of  the  furnace  is  about  550  tons  a  week,  taking 
the  average  of  the  seasons.  The  ores  used  are  mostly  Lake  Su- 
perior, specular  and  hematite.  During  the  present  season  the 
furnace  will  have  received  about  twenty-five  thousand  tons  from 
the  Kloman  mine,  the  property  of  the  company  near  Negaunee, 
Mich.  [This  is  an  error.]  Some  Iron  Mountain  ores  have  been 
smelted  in  the  furnace;  but  they  were  found  more  costly  than 
profitable,  and  their  use  has  been  abandoned.  The  fuel  is  a 
coke  made  from  the  slack  of  the  bituminous  mine  near  Pittsburg 
— at  ovens  located  at  Carpenter's  station  on  the  Pennsylvania 
Railroad,  about  nineteen  miles  distant.  The  fuel  costs  but 
$3.60  per  ton  at  the  furnace,  and  we  are  informed  that  the  con- 
sumption in  the  stack  is  only  about  one  and  a  half  tons  to  the 
ton  of  pig-iron  made. 

Among  the  novelties  to  be  seen  at  these  works  is  a  very 
simple  and  practical  machine  for  cooling  slag,  invented  by  Mr. 
Andrew  Kloman,  one  of  the  proprietors.  Its  object  is  simply 
to  cool  the  slag  quickly  in  blocks  of  convenient  size  for  removal, 
thereby  saving  both  time  and  labor.  It  consists  of  an  annular 
water  trough,  with  supply  and  waste  pipe's,  in  which,  by  suitable 
appliances,  a  series  of  cinder  boxes  are  made  to  rotate  so  that 
they  may  be  brought  successively  under  the  slag  spout.  The 
boxes  taper  slightly  toward  the  bottom  so  as  to  admit  of  the 
easy  withdrawal  of  the  slag  cakes  when  sufficiently  cool.  On 
the  bottom  of  each  box  is  placed  an  iron  wedge  with  a  broad, 
flat  head,  upon  which  it  stands  upright,  and  with  a  hole  in  the 
taper  end  by  which  it  may  be  lifted  out.  The  slag  runs  around 
these  wedges  which  stand  up  in  the  middle  of  the  boxes  and 
project  for  some  inches  above  the  upper  crust.  Around,  under, 


60  A   RIVALRY  OF  GREAT  FURNACES 

arid  between  the  boxes  water  flows  continuously,  and  their  inner 
surfaces  are  kept  so  cool  that  in  a  few  minutes  the  slag  is  suffi- 
ciently solid  to  be  removed  in  carts.  The  transfer  is  effected 
by  means  of  a  small  hydraulic  crane.  The  hook  at  the  end  of 
the  chain  is  fastened  in  the  hole  in  the  taper  end  of  the  wedge, 
and  the  cake  is  lifted  out  of  the  box  and  deposited  on  the  floor 
of  the  cart,  which  has  a  square  hole  in  its  bottom  to  facilitate 
the  removal  of  the  wedge.  The  slag  cake  is  so  placed  that  the 
head  of  the  wedge  comes  over  the  hole,  and  a  smart  blow  with 
a  hammer  causes  it  to  drop  out  on  the  ground.  The  cake  is 
then  carried  off  and  dumped.  In  construction  and  operation 
this  machine  is  perfectly  simple,  and  it  may  be  worked  so  rap- 
idly as  to  dispose  of  the  slag  as  fast  as  it  can  be  run  from  the 
spout.  There  are  seventeen  cinder  boxes  ;  and  by  the  time  the 
last  has  been  filled  the  slag  cake  in  the  first  is  ready  to  be  lifted 
out  and  removed.  The  proprietors  of  the  Lucy  Furnace  con- 
sider it  altogether  the  cheapest  and  best  method  of  disposing  of 
the  cinder  they  have  ever  tried,  and  we  have  no  hesitation  in 
pronouncing  it  the  most  practical  device  of  its  kind  we  have 
ever  seen  in  use. 

Some  months  ago  the  furnace  got  a  chill,  and  but  for  the  in- 
genious manner  in  which  it  was  cleared  the  company  would  have 
suffered  a  heavy  loss  in  consequence.  The  following  account 
of  the  means  employed,  which  we  take  from  a  paper  lately  read 
by  E.  C.  Pechin  before  the  American  Institute  of  Mining  Engi- 
neers at  Philadelphia,  will  be  read  with  interest :  "  She  had  been 
working  well  on  low-grade  ores  of  about  fifty  per  cent.,  produ- 
cing daily  sixty-eight  to  seventy-five  tons.  There  was  on  stack 
five  hundred  tons  of  Republic  ore — one  of  the  purest  and  best 
of  the  Lake  Superior  ores,  averaging  over  sixty-eight  per  cent, 
of  iron — which  had  been  procured  for  the  purpose  of  making  a 
trial  for  Bessemer  iron.  This  was  charged  by  itself,  and  Mr. 
Skelding,  the  founder,  reports  that  he  did  not  succeed  in  get- 
ting a  single  cast  when  it  came  down,  before  the  furnace  chilled 
from  the  hearth  to  the  top  of  the  bosh,  some  twenty-five  feet. 
Every  effort  was  made  to  save  her,  but  without  avail ;  and  the 
disagreeable  jduty  of  cleaning  her  out  was  begun.  The  hearth 
was  dug  out  some  five  or  six,  or  perhaps  eight,  feet  up,  when  Mr. 
Skelding  remarked,  in  the  hearing  of  one  of  the  proprietors, 
that  he  wished  he  had  a  cannon.  A  mortar  was  forthwith  pro- 
cured from  the  arsenal,  and  -they  commenced  firing  shots  into 
the  chilled  mass.  A  large  number  of  shots  were  fired  and  with 
considerable  success,  bringing  down  from  time  to  time  portions 
of  the  chill.  But  by  and  by  the  mass  became  pasty,  and  the 


CURRY'S   GOOD    WORK  61 

cannon  balls,  of  which  they  only  had  three,  stuck  fast.  Mr. 
Skelding  put  in  a  large  charge  of  powder,  and  then,  to  the 
amusement  of  the  bystanders,  rammed  the  mortar  full  of  cotton 
waste,  and  on  top  of  this  placed  a  lump  of  hard  ore  weighing 
about  fifty  pounds.  This  novel  shot  brought  down  the  scaffold 
and  cannon  balls,  and  the  furnace  is  again  running  and  doing 
exceedingly  well."  As  far  as  the  writer  knows  no  patent  has 
been  taken  out  for  this  process  (for  a  wonder!),  so  that  it  is 
available  for  any  furnace  man  who  is  so  unfortunate  as  to  have 
a  scaffold. 

Another  experiment  is  shortly  to  be  tried  at  this  furnace 
which  is  novel,  at  least  in  this  country.  It  is  proposed  to  use 
two  tiers  of  tuyeres,  one  eighteen  inches  above  the  other — seven 
below  and  five  above.  There  is  a  theory  that  by  elevating  the 
zone  of  fusion  a  larger  product  of  superior  metal  would  result. 
The  Lucy  Furnace  will  test  this  theory  on  a  large  scale  and 
under  the  most  favorable  circumstances,  and  the  result  will  not 
be  without  interest  to  all  in  the  business. 

This  nai've  description  gives  a  better  idea  of  the  primitive 
methods  of  furnace  practice  then  in  vogue  than  could  possibly 
be  obtained  from  any  modern  authority. 

Much  of  the  excellent  work  of  the  Lucy  Furnace  in  early 
years  was  due  to  the  skill  and  enterprising  management  of  H. 
M.  Curry,  who  remained  an  important  factor  in  the  success  of/ 
the  Carnegie  enterprises  until  his  death  in  1899.  Mr.  Curry 
was  born  on  January  3Oth,  1847,  at  Wilkinsburg,  a  suburb  of 
Pittsburg,  where  he  spent  his  early  years.  At  sixteen  he  joined 
the  army  as  a  private,  and  served  in  the  Fifth  Army  Corps  as  a 
member  of  Company  F,  i  5  5th  Pennsylvania  Volunteers,  for  three 
years,  and  was  mustered  out  of  servi'ce  as  a  sergeant.  He  was 
slightly  wounded  at  the  battle  of  Five  Forks,  but  only  spent  a 
few  days  in  the  hospital.  His  first  position  on  returning  from 
the  war  was  with  the  firm  of  Haleman  &  Caughey,  pig-iron 
brokers,  where  he  attracted  the  attention  of  Mr.  Phipps,  who, 
towards  the  close  of  1870,  gave  him  a  position  as  pay  and  bill 
clerk  in  the  Upper  Union  Mill.  In  1871  he  was  transferred  to 
the  Lucy  Furnace,  where  he  was  given  charge  of  the  record 
department  of  furnace  burdens.  His  simple  cordiality  won  the 


62 


RIVALRY  OF  GREAT  FURNACES 


devotion  of  the  men,  while  his  thoroughness  and  conscientious 
attention  to  duty  gained  the  confidence  of  his  employers ;  and 
when,  after  two  or  three  years,  certain  structural  changes  in  the 
furnace  were  decided  upon,  Mr.  Curry  was  put  in  charge  of 
them.  On  thej~etirement  of  the  first  superintendent,  William 
Skelding,  Mr.  Curry,  at  the  urgent  recommendation  of  Mr. 
Phipps,  was  put  in  his  place,  and  under  his  management  the 

Lucy    Furnace    won    the 
records  just  described. 

Of  course  such  results 
were  not  entirely  due  to 
any  one  man's  skill.  Many 
of  the  improvements  made 
were  suggested  by  others  ; 
but  Mr.  Curry  was  so  free 
from  conceit  that  he  was 
just  as  ready  to  cherish 
the  ideas  coming  from  out- 
side as  he  was  to  fondle 
his  own. 

Another  man  to  whom 
no  small  part  of  the  credit 
of  the  improvement  is  due 
was  Mr.  Whitwell,  the  in- 
ventor of  the  famous  stoves 
that  bear  his  name.  In 
1873  this  gentleman  came 
to  Mr.  Phipps,  and  showed  him  that  if  he  would  shape  the  bell 
of  the  furnace  so  that  the  contents  would  be  thrown  toward  the 
sides,  it  would  not  only  preserve  the  lining  of  the  furnace  and 
save  the  great  cost  of  frequent  renewals,  but  it  would  result  in 
such  a  segregation  of  the  contents  as  to  make  a  better  draught, 
with  resulting  increase  of  output.  The  proposition  was  so  revo- 
lutionary that  Mr.  Phipps  naturally  hesitated  to  make  the  change ; 
and  Mr.  Whitwell  had  a  glass  model  of  the  improved  furnace 


"The  experiment  was  repeated.' 


A    WONDERFUL   RECORD  63 

made  and  erected  in  the  Lucy  yards.  At  once  the  beneficial 
effect  of  the  change  could  be  seen  through  the  glass  as  the 
miniature  loads  of  ore,  lime,  and  coke  were  poured  into  the 
model.  It  was  a  bitterly  cold  day  when  the  demonstration  was 
made ;  but  the  event  was  so  important  that  the  partners  endured 
the  icy  blasts  for  hours,  and  the  experiment  was  repeated  again 
and  again.  All  the  partners  conceded  that  it  was  eminently 
successful — but  next  day  most  of  them  were  laid  up  with  colds, 
and  Andrew  Carnegie  did  not  reappear  at  the  works  for  a  week. 
When  the  change  was  made  in  the  furnace  the  results  predicted 
by  Mr.  Whitwell  were  surpassed,  and  again  a  new  furnace  record 
was  made  for  the  world. 

In  1877  the  second  Lucy  furnace  was  built,  and  "blown  in" 
on  September  27th  of  that  year.  Its  general  dimensions  were 
those  of  the  first  Lucy  furnace.  By  1878  it  made  a  monthly 
output  of  3,286  tons  on  a  coke  consumption  of  2,973  pounds 
per  ton  of  iron,  and  in  a  single  week  it  made  821  tons.  In 
twelve  consecutive  months  the  output  was  33,931  tons  on  a  coke 
consumption  of  2,850  pounds,  a  remarkable  achievement  at  that 
time. 

The  first  Isabella  furnace  also  made  a  wonderful  record, 
when  it  ran  continuously  from  January,  1876,  until  May,  1880, 
making  a  total  output  of  117,575  tons  of  pig-iron,  an  average 
of  2,264  tons  a  month.  The  coke  consumption  averaged  about 
3,000  pounds. 

The  Lucy  furnaces  during  all  this  time  were  the  especial 
care  of  Mr.  Phipps.  For  months  he  almost  lived  in  their  vicin- 
ity, and  sat  up  with  them  at  night  when  they  were  ailing  as  he 
would  have  watched  by  the  sick-bed  of  a  favorite  child.  As  he 
had  earlier  watched  the  machinery  at  work  at  the  Union  Mills, 
he  now  attended  the  operation  of  the  furnaces  night  and  day, 
thinking,  scheming,  and  studying  them  in  every  aspect.  An 
example  of  the  ingenuity  he  displayed  in  his  never-ending  quest 
of  economies  is  here  recalled. 

One  of  the  products  of  the  furnace  was  known  as  mill-iron. 


64  A   RIVALRY  OF  GREAT  PURNACES 

This  was  the  iron  resulting  from  a  mixture  in  the  furnace  of 
seventy-five  to  eighty  per  cent,  of  Lake  Superior  ore  and  twenty 
to  twenty-five  per  cent,  of  puddle-furnace  cinder.  The  cost  of 
this  cinder  per  unit  of  iron  was  less  than  one-tenth  the  cost  per 
unit  of  iron  made  of  ore ;  but  the  cinder  contained  more  than 
three  times  the  phosphorus  that  was  in  the  same  amount  of  ore, 
which  limited  the  use  of  the  cheaper  mixture.  Mr.  Phipps 
knew  that  the  Union  Iron  Mills,  in  common  with  all  similar 
works,  made  a  large  amount  of  heating-furnace  or  flue  cinder, 
which  was  considered  a  waste  product  and  thrown  out  on  the 
river-banks.  He  quietly  had  some  of  this  cinder  analyzed,  and 
found  it  as  rich  in  iron  as  the  puddle-cinder.  It  also  worked 
equally  well  in  the  furnace,  and  carried  less  than  one-fifth  the 
amount  of  phosphorus  contained  in  the  puddle-cinder.  He 
therefore  changed  the  furnace  mixture  to  sixty  per  cent,  of  flue- 
cinder  and  forty  per  cent,  of  Lake  Superior  ore ;  and,  despite 
this  great  economy,  a  better  pig-iron  was  produced  than  before. 
This  was  kept  a  trade  secret  for  years,  during  which  thousands 
of  tons  of  flue-cinder  were  bought  at  prices  much  below  the 
cost  of  puddle-cinder.  Indeed,  the  firm  for  years  sold  its  pud- 
dle-cinder through  brokers  at  $i  and  $1.50  per  ton,  which  found 
its  way  into  the  hands  of  a  competitor,  and  in  the  same  way 
bought  this  competitors  flue-cinder  for  fifty  cents  a  ton.  Nat- 
urally the  Lucy  Furnace  was  prosperous  and  making  money 
when  rival  concerns,  thus  disadvantaged,  were  running  behind. 
This  incident,  one  of  many  that  might  be  cited,  fairly  illus- 
trates the  character  of  the  services  which  Mr.  Phipps  was  con- 
stantly rendering  his  firm ;  for  of  course  his  discovery  was  only 
used  to  benefit  the  company.  It  also  recalls  the  fact  that  not 
all  the  partners  took  the  same  broad  view  of  their  obligations 
to  the  common  interest;  for  one  of  them,  a  protege  and  cousin 
of  the  Carnegies,  who  had  recently  been  admitted  into  the 
partnership,  engaged  in  a  private  speculation  on  the  strength  of 
Mr.  Phipps'  discovery.  He  bought  up  all  the  flue-cinder  he 
could  hear  of;  but,  lacking  a  knowledge  of  the  correct  percent- 


P  HIP  PS,   THE  POCKET-NERVE  65 

ages,  or  being  estopped  by  partnership  obligations  from  making 
them  known,  he  could  find  no  market  for  his  cinder -heaps,  and 
he  made  a  large  loss. 

Mr.  Phipps  acquired  a  reputation  for  close  trading  at  this 
time  which  is  still  remembered.      In  buying  scrap-iron  he  had   K 
to  bargain  with  all  sorts  of  odd  characters,  one  of  whom  would 
insist  in  the  strongest  brogue  that  "  divil  a  cint  was  left  to  a 
harrd  wurrking  man  afther  a  thrade  with  Harry  Phipps,  bad 
cess  to  him  !  "     Another  was  detected  in  an  ingenious  method 
of  evening  things  up.     He  had  two  carts  shaped  and  painted 
exactly  alike,  but  one  weighed  about  five  hundred  pounds  more 
than  the  other.     On  delivering  his  first  load  of  scrap  at  the    ,- 
furnace    he  would    use    the    light  wagon, 
which  was  weighed  both  before  and  after 
unloading,    and  the  difference  constituted 
the  net  weight  of  scrap  for  which  he  was 
paid.      On  subsequent  trips,   however,   he 
used  the  heavier  cart,  and  failed  to  weigh 
it   after  unloading.     The  clerk,  believing 
that   it  was  the  same  cart  as  had  previous- 

.  "  Bad  cess  to  him  !" 

ly  been  weighed  empty,  credited  him  every 
trip  with  five  hundred  pounds  more  than  had  been  delivered. 
It  was  at  the  Lucy  Furnaces  that  Mr,  Phipps  first  employed 
a  chemist  with  excellent  results.  The  Pennsylvania  Steel  Com- 
pany at  Harrisburg  were  large  buyers  of  Bessemer  pig-iron,  and 
their  requirements  were  stated  in  chemical  terms,  the  princi- 
pal one  being  that  the  metal  should  not  contain  more  than  ten 
hundredths  of  one  percent,  of  phosphorus;  and  twenty-five 
cents  a  ton  was  deducted  from  the  price  for  every  increase  of 
one- hundredth  of  one  per  cent.  In  this  way  it  was  early  im- 
pressed upon  Mr.  Phipps,  who  was  the  pocket-nerve  of  the  con- 
cern, that  a  practical  chemist  was  a  necessary  member  of  their 
staff;  and  it  is  believed  that  this  company  was  the  first  not 
directly  connected  with  Bessemer  steel  production  to  benefit  by 
the  services  of  an  expert  chemist. 


66  A    RIVALRY   OF  GREAT  FURNACES 

It  is  unfortunate  that  the  disagreements  of  partners  should 
occupy  so  large  a  place  in  this  history;  but  as  these  invariably 
had  a  more  or  less  important  bearing  on  the  subsequent  devel- 
opment of  the  enterprise,  by  eliminating  some  members  and 
elevating  others,  they  must  rank  with  other  factors  in  the  evolu- 
tion of  this  great  business.  This  time  it  is  the  story  of  Klo- 
man's  withdrawal  from  the  firm ;  and  in  view  of  the  many 
erroneous  statements  which  have  been  made  concerning  this 
event,  it  is  especially  desirable  that  the  facts  should  at  last  be 
set  forth. 

Shortly  after  the  construction  of  the  Lucy  Furnace  was 
started  Mr.  Kloman  was  persuaded  to  join  a  group  of  enthu- 
siasts for  the  purpose  of  mining  and  smelting  ore  in  Michigan. 
Joseph  Kirkpatrick,  the  leader  of  the  group,  was  a  flighty  in- 
dividual of  the  Colonel  Sellers  type,  who  is  described  by  an 
acquaintance  as  being  able. to  "talk  the  buttons  off  your  coat." 
The  mining  company  was  known  as  the  Cascade  Iron  Company, 
and  the  smelting  concern  was  called  the  Escanaba  Furnace 
Company.  None  of  the  other  Carnegie  partners  would  have 
anything  to  do  with  the  enterprise. 

The  Cascade  Company,  having  a  large  body  of  ore  in  sight, 
made  special  exertions  to  get  a  contract  to  supply  the  Lucy 
Furnace;  and  it  is  told  of  Kirkpatrick  that,  having  found  a 
specially  rich  specimen,  he  had  it  analyzed,  and,  on  the  strength 
of  its  high  metallic  contents,  he  undertook  to  supply  ores  "  equal 
to  any  Lake  Superior  ores,  Columbia  ore  only  excepted.  "  With 
this  guarantee  a  contract  was  made  with  the  Lucy  Furnace 
Company;  but  when  the  Cascade  mineral  was  worked  in  the 
furnace  it  developed  only  forty-five  to  fifty  per  cent,  of  metallic 
iron  instead  of  sixty-two  to  sixty-six  per  cent,  as  had  been  ex- 
pected. By  this  time  new  mines  in  the  Lake  Superior  region 
had  developed  ore  bodies  which  approached  very  closely  in  value 
to  the  Columbia  ore ;  and,  under  the  guarantee,  the  owners  of 
the  Lucy  Furnace  felt  that  they  had  a  claim  against  the  Cas- 
cade people  for  damages.  The  claim  was  made,  and  was  met 


m   mm 


68  A    RIVALRY   OF  GREAT  FURNACES 

by  denials  and  counter-claims ;  and  after  some  unpleasant  corre- 
spondence the  Carnegies  entered  suit  for  $200,000  damages. 
Before  this  came  into  court,  Jay  Cooke  &  Co.  failed  and  the 
panic  of  '73  ensued.  The  Cascade  and  Escanaba  companies, 
having  used  up  most  of  their  funds  and  all  of  their  credit— 
which  was  exceptionally  good  at  the  outset — found  themselves 
in  no  position  to  meet  panic  conditions  while  burdened  with 
this  great  suit.  They  therefore  deemed  it  prudent  to  compro- 
mise with  the  Lucy  Furnace  owners  for  $100,000,  to  be  paid  in 
instalments.  Few  payments  were  made  under  this  settlement 
before  both  the  Cascade  and  the  Escanaba  companies  failed; 
and  the  members  found  themselves  personally  responsible  for 
the  companies'  debts.  Mr.  Kloman,  who  had  imagined  the 
concerns  to  be  limited  liability  companies,  was  a  shining  mark 
for  the  creditors,  and  he  was  pushed  to  the  verge  of  bank- 
ruptcy. 

Fearing  that  such  a  catastrophe,  if  forced  by  Kloman 's  credit- 
ors, would  involve  the  other  concerns  with  which  he  was  con- 
nected and  entail  a  dissolution  of  them,  Andrew  Carnegie  made 
a  written  offer  to  Kloman  to  restore  him  to  full  partnership  if 
he  would  make  a  voluntary  assignment  and  get  a  judicial  dis- 
charge. This  Kloman  agreed  to  do ;  and  a  committee  of  the 
creditors  was  formed  to  appraise  his  interests,  which  the  Carne- 
gies bought.  Kloman  was  thus  enabled  to  make  a  settlement 
of  fifty  cents  on  the  dollar. 

The  disaster  shook  the  Carnegie  concern  to  its  foundations ; 
and  for  a  time  it  seemed  as  if  they  all  would  be  overwhelmed  in 
a  common  ruin.  But  the  high  financial  standing  of  McCand- 
less,  Stewart  and  Scott,  with  whom  the  Carnegies  had  just 
made  an  alliance,  as  will  be  told  elsewhere,  arid  the  ingenuity 
of  Mr.  Phipps,  enabled  them  to  weather  the  storm. 

The  disentanglement  of  Kloman's  affairs  occupied  three  or 
four  years,  during  which  he  worked  with  the  Carnegies,  and  re- 
ceived a  salary  of  $5,000  a  year.  When  he  was  free  to  hold 
property  again,  Andrew  Carnegie  offered  him  an  interest  of 


KLOMAN'S    WITHDRAWAL  69 

$100,000  in  the  various  enterprises,  to  be  paid  for  out  of  profits. 
This  dij:l  not  satisfy  Kloman,  who  valued  his  interest  at  several 
times  one  hundred  thousand  dollars;  and  he  demanded  com- 
plete reinstatement  in  all  the  Carnegie  companies,  in  accordance 
with  the  previous  understanding.  As  he  had  no  binding  con- 
tract— the  written  offer  and  its  acceptance  had  carried  no 
legal  consideration — he  was  unable  to  enforce  his  demand, 
and  he  withdrew  from  the  Carnegie  group  in  bitterness  and 
a»ger. 

The  later  history  of  the  Lucy  Furnaces  as  a  separate  organi-  j 
zation  can  be  told  in  a  few  sentences.  In  June,  1881,  a  two- 
thirds  interest  was  sold  to  Wilson,  Walker  &  Co. ;  and  James 
R.  Wilson  of  that  firm,  one  of  the  Original  Six  of  Andrew 
Carnegie's  boy-friends,  was  made  chairman  of  the  Lucy  Furnace 
Company,  Ltd.,  which  was  now  organized.  The  purpose  of  this 
change  was  to  release  Mr.  Phipps  and  Mr.  T.  M.  Carnegie  from 
the  close  attention  which  they  had  been  giving  the  furnaces, 
that  they  might  concentrate  their  efforts  on  the  business  of  the 
Edgar  Thomson  plant  at  Braddock.  Mr.  Wilson  was  in  poor 
health  at  the  time  of  his  accession  to  power  at  the  furnaces ; 
and  his  new  duties  and  responsibilities  aggravated  his  trouble. 
He  died  in  1883  and  was  succeeded  by  E.  A.  McCrum.  Later 
Mr.  Julian  Kennedy  had  charge  of  the  furnaces ;  and,  with  the 
same  skill  as  he  has  applied  to  all  his  work,  he  soon  won  back 
for  the  Lucy  the  laurels  she  had  lost  to  the  newer  furnaces  at 
Braddock. 

On  January  ist,  1886,  the  Lucy  Furnaces,  the  Upper  and 
Lower  Union  Mills,  and  the  Pittsburg  Bessemer  plant  at  Home- 
stead were  all  brought  together  in  one  organization,  Carnegie, 
Phipps  &  Co.,  Limited,  of  which  Mr.  John  Walker  became 
chairman. 

The  complete  record  of  these  furnaces,  on  which  the  atten- 
tion of  the  iron-making  world  was  riveted  for  many  years,  will 
be  found  on  the  following  page. 


A    RIVALRY  OF  GREAT   FURNACES 


LUCY  FURNACES. 

No.  i.  No.  2. 

Tons  per  annum.  Tons  per  annum 

1872 I3,36l  ...... 

1873 21,674  

1874 24,543 

1875 22,984  

1876 16,174  

1877 28,918  6,644 

1878 33,980  28,151 

1879 25,942  31,668 

1880 20,910  33,931 

1881 38,186  30,978 

1882 22,385  35,453 

1883 44,317  24,235 

1884 Rebuilding.  58,416 

1885 68,047  47,498 

1886 56,209  64,266 

1887 64,259  57,099 

1888 63,970  55,834 

1889 60,447  70, 749 

1890 76,019  72,155 

(  No  iron  April  'gl 

I89' '  72,128  53,186  |  _Coke  strfke 

1892 66,203  Relining.      71,289 

1893 59,413  48,787     6  months  only. 

1894 81,395  82,419 

1895  102,867  87, 542 

1896 102,341  104,411 

1897 113,060  104,963 

1898 62,967  Relining.      61,186  Relining. 

1899 ••     88,777  37,102 

1900 62,231  Relining.       57,895  Relining. 

1901 82,677  41,251 

1902 73,537  38,575 


CHAPTER    VI 

BEGINNINGS    AND    GROWTH    OF    THE   STEEL 

BUSINESS 

MANY  accounts  of  the  beginnings  of  the 
Carnegie  Bessemer  steel  business  have  ap- 
peared  from  time  to  time  in  magazines  and 
other  periodicals,  some  unwittingly  fanci- 
ful, others  obviously  unfair,  and  most  of 
them  contradictory.  Indeed,  so  far  as  the 
author  knows,  the  actual  facts  concerning  this  important  event 
have  never  been  correctly  set  forth  in  any  of  the  numerous 
historical  sketches  of  the  enterprise  which  have  been  written, 
nor  in  the  many  published  biographical  notices  of  the  men  asso- 
ciated with  it.  Even  the  more  carefully  compiled  books  which 
occasionally  have  been  published  on  the  subject  have  contained 
more'  romance  than  fact.  This  is  equally  true  of  all  the  other 
branches  of  the  Carnegie  business. 

The  reason  of  this  ever-increasing  accumulation  of  misstate- 
ment  is  not  far  to  seek.  Hitherto  no  documentary  history  of 
the  constituent  companies  of  the  Carnegie  Steel  Company 
has  beeu  attempted.  No  independent  effort  has  been  made  to 
go  back  to  the  beginnings  of  things — to  trace  to  their  source 
the  tiny,  separate  rivulets  which,  later,  came  together  and  formed 
such  a  great  and  impressive  stream.  Having  no  authoritative 
data  before  them,  early  writers  were  led  into  errors  and  mis- 
statements  of  facts  which  have  been  transmitted  from  one  gen- 
eration of  historians  and  biographers  to  another,  until  now  it  is 
hardly  possible  for  the  chance  investigator  to  disinter  even  an 
occasional  truth  from  the  mass  of  error  under  which  it  is 
buried. 

71 


72  THE   STEEL   BUSINESS 

Another  thing  has  contributed  to  give  these  fictions  the 
semblance  of  fact :  they  have  been  tacitly  accepted  as  true  by 
those  who  knew  better.  The  Carnegie  Company  grew  to  such 
vast  proportions  as  practically  to  dominate  the  steel  industry  of 
America;  and  the  honor  of  founding  and  guiding  it  to  success 
was  very  flattering  to  the  vanity  of  those  to  whom  it  was  ascribed. 
During  the  later  history  of.  the  concern,  when  the  trade-grooves 
of  which  Mr.  Phipps  so  aptly  speaks  had  been  made,  and  the 
business  was  running  smoothly,  there  came  into  prominence  a 
group  of  "young  geniuses,"  as  Andrew  Carnegie  calls  them, 
whose  achievements  have  overshadowed  those  of  the  men  who 
did  the  first  hard  work  and  made  the  grooves.  Many  of  these 
being  dead,  the  credit  which  was  rightly  theirs  has  been 
given  to  the  living,  and  generally  accepted  without  disclaimer. 
Many  laurel  wreaths  are  being  proudly  worn  to-day  which,  in 
all  honor,  should  deck  the  graves  of  Andrew  Kloman,  William 
Coleman,  Thomas  M.  Carnegie,  David  A.  Stewart,  William  P. 
Shinn,  David  McCandless,  Henry  M.  Curry  and  others  who 
have  long  since  joined  the  silent  and  unprotesting  majority. 

The  important  part  which  William  Coleman  had  in  the  ori- 
gin of  the  Lucy  furnaces  has  already  been  mentioned.  To  him 
also  is  due  the  honor  of  founding  the  Carnegie  Bessemer  steel 
business. 

Early  in  1871  Mr.  Coleman,  who  had  been  a  manufacturer 
of  iron  rails,*  visited  the  various  steel  works  throughout  the 

*  The  first  steel  rails  used  in  the  United  States  were  imported  from  England 
in  1862  by  the  firm  of  Philip  S.  Justice  &  Co.  of  Philadelphia  and  London. 
Mr.  J.  Howard  Mitchell  of  that  firm  reported  the  transaction  to  the  editor  of  Iron 
Age  in  1882.  Steel  rails  were  then  used  to  a  limited  extent  in  England';  and  so 
enthusiastic  in  their  praises  of  these  rails  were  the  managers  of  the  lines  on  which 
they  were  used  that  the  firm  in  question  endeavored  to  have  American  railroads 
make  some  experiments  with  steel.  But  the  Philadelphia  firm  were  looked  upon 
as  fanatics,  if  not  swindlers,  when  they  talked  about  steel  rails  to  American  rail- 
road managers  ;  and  it  was  seldom  that  they  could  obtain  the  earnest  attention  of 
the  proper  officers.  "  The  rule  was,"  Mr.  Mitchell  says,  "  to  bow  us  out  of  the 
office  and  end  the  annoyance  of  being  talked  to  by  a  dreamer." 

In  1862,  however,  after  many  efforts  in  this  and  other  directions,  J.  Edgar 


Plate  IV, 


THOMAS   M.  CARNEGIE 

A.  T    THE     A  0  E     OK     NINETEEN 


COLEMAN   THE  FOUNDER  73 

country — at  Johnstown,  Cleveland,  Harrisburg,  Spuyten  Duy- 
vil  and  Troy — in  order  to  observe  the  operation  of  the  Bes- 
semer converters  which  had  been  installed  at  these  places  dur- 
ing the  preceding  four  years.  He  was  then  sixty-five  years 
old,  but  full  of  energy,  and  enterprising  and  far-sighted  beyond 
most  of  his  contemporaries. 

The  first  result  of  his  observations  was  to  secure  a  site  for 
a  steel  works.  In  this  he  got  his  son-in-law,  Thomas  M.  Car-  , 
negie,  to  join  him;  and  together  they  obtained  the  option  of 
purchasing  a  tract  of  one  hundred  and  seven  acres  of  farm  land 
called  Bradcjock's  Field,  being  the  identical  site  of  the  defeat 
of  General  Braddock  in  1755,  on  the  Monongahela  River,  a 
dozen  miles  above  Pittsburg.  Bounded  on  the  north  by  the 
Pennsylvania  Railroad,  traversed  through  its  centre  by  the  Bal- 
timore and  Ohio,  with  the  Monongahela  affording  water  trans- 
portation on  its  southern  boundary,  it  was  an  ideal  spot  for  the 
purpose. 

Mr.  Coleman  resided  at  this  time  in  the  old  homestead  of 
Judge  Wilkins  on  Penn  Avenue,  Homewood;  and  young  Car- 
Thomson,  then  president  of  the  Pennsylvania  Railroad  Company,  was  induced  to 
give  steel  rails  a  trial ;  and  he  ordered  one  hundred  tons  at  $150  per  ton  in  gold — 
equivalent  at  that  time  to  something  like  $300  per  ton  in  currency.  But  unfortu- 
nately the  trial  lot  of  rails  was  made  of  crucible  steel,  which  proved  to  be  very  high 
in  carbon,  though  made  to  resist  wear.  They  were  put  in  the  tracks  of  the  com- 
pany in  yards  and  at  other  points  where  the  greatest  wear  took  place  ;  and  during 
the  following  winter,  which  was  a  very  severe  one,  many  of  them  broke.  Such  a 
result  might  have  been  a  crushing  blow  to  the  use  of  steel  rails  if  it  had  happened 
under  the  management  of  a  less  sagacious  man  than  Mr.  Thomson.  He  saw, 
however,  that  if  he  could  get  rails  that  would  not  break,  yet  would  endure  the 
great  traffic  on  his  railroad  with  as  little  wear  as  this  lot  had  shown,  it  would  be 
extremely  desirable ;  and  he  therefore  gave  further  orders,  first  for  five  hundred 
and  then  for  one  thousand  tons,  which  at  that  time  were  looked  upon  as  wonder- 
fully large  orders. 

In  1867  Messrs.  Philip  S.  Justice  &  Co.  sold  to  the  old  Beaver  Meadow  Rail- 
road Company,  now  part  of  the  Lehigh  Valley  Railroad  Company,  one  hundred 
tons  of  steel  rails  for  $162.50  per  ton  in  gold,  or  about  $250  per  ton  in  currency, 
and  other  lots  at  $135  per  ton  gold.  These  rails  were  still  in  the  tracks  in  1883, 
and  Mr.  Lloyd  Chamberlin,  then  treasurer  of  the  Lehigh  Valley  road,  told  Mr. 
Mitchell  that  they  were  excellent  rails  and  were  still  in  use.  Very  slowly  did  the 
use  of  steel  rails  grow  from  these  humble  beginnings.  (  Vide  Iron  Age,  August 
i6th,  1883.) 


74 


'1HE    STEEL    BUSINESS 


negie  lived  in  a  smaller  place  adjoining.  Coleman  and  his  son- 
in-law  used  to  drive  to  town  together;  and  the  plans  of  the  new 
steel  works  were  developed  during  these  drives.  Their  nearest 
neighbors  were  David  A.  Stewart  and  his  brother-in-law,  John 
Scott,  both  railway  men,  the  former  being  also  president  of  the 
Pittsburg  Locomotive  Works,  while  the  latter  was  a  director  of 
the  Allegheny  Valley  Railroad.  Mr.  Stewart  was  also  presi- 
dent of  the  Columbia  Oil 
Company,  of  which  Mr. 
Coleman  had  been  one  of 
the  original  organizers; 
but  making  over  his  stock  » 
to  Andrew  Carnegie,  Mr. 
Coleman  did  not  materially 
benefit  by  the  fabulous  div- 
idends which  made  Andrew 
Carnegie  rich. 

On  mentioning  the 
scheme  to  his  neighbors, 
whose  connections  with  the 
railroads  made  their  co- 
operation especially  desir- 
able, Coleman  readily  ob- 
tained the  adhesion  of  both  «. 
Stewart  and  Scott.  At  the 
same  time  young  Carnegie 
brought  the  project  to  the 
attention  of  his  brother,  who  lived  in  New  York  and  was 
engaged  in  various  construction  companies  and  similar  schemes.  • 
The  elder  Carnegie  strongly  opposed  it,  and  refused  to  con- 
nect himself  with  it  in  any  way.  It  conflicted  with  his  theory  • 
about  the  unprofitableness  of  pioneering.  Tom  then  sought 
the  co-operation  of  Mr.  David  McCandless,  one  of  the  most 
prominent  merchants  of  Pittsburg,  and  vice-president  of  the 
Exchange  National  Bank.  Mr.  McCandless  had  known  the  , 


WILLIAM  COLEMAN, 

Who,  with  his  son-in-law,  Thomas  M.  Car- 
negie, founded  the  Edgar  Thomson  Steel 
Works. 


CARNEGIE'S  BELATED   ZEAL  75 

younger  Carnegie  since  childhood  through  his  connection  with 
the  Swedenborgian  Church,  of  which  all  the  Carnegies  were 
members;  and  being  familiar  with  the  excellent  work  he  had 
done  during  the  early  struggles  of  the  Union  Iron  Mills,  he 
consented  to  join  him  and  Coleman  in  the  new  venture,  pro- 
vided that  his  friend  William  P.  Shinn  was  taken  into  the  firm  • 
and  made  treasurer  of  it. 

In  the  spring  of  1872  Colonel  Scott,  who  was  ever  seeking 
to  put  profitable  things  in  the  way  of  Andrew  Carnegie,  had 
him  commissioned  by  President  J.  Edgar  Thomson,  of  the  Penn- 
sylvania Railroad,  to  go  to  Europe  to  market  a  block  of  the  «. 
bonds  of  a  new  railroad  which  was  to  run  to  Davenport,  Iowa. 
Carnegie  sailed  in  April,  and  was  successful  in  selling  $6,000,- 
ooo  of  the  bonds.  His  aggregate  commissions — for  he  was 
fortunate  enough  to  get  them  from  both  sides — amounted  to 
$150,000.  Incidentally  the  loss  to  the  purchasers  of  the  bonds  - 
was  $6,000,000 — every  cent  they  put  in ;  and  a  futile  effort  was 
afterwards  made  to  hold  Carnegie  responsible  for  the  loss. 

During  this  European  trip  Carnegie  made  a  study  of  the 
Bessemer  steel  situation  there.  In  England  the  industry  was  * 
firmly  established;  and  Bessemer  steel  rails  were  being  made  in 
ever-increasing  quantities  at  good  prices.  At  Derby  visitors 
were  shown  a  double-headed  Bessemer  rail  which  had  been  laid 
down  in  1857 — at  a  point  on  the  Midland  Railway  where  previ- 
ously iron  rails  had  sometimes  to  be  renewed  within  three 
months — and  which  after  fifteen  years'  constant  use  was  still  in 
good  shape.  In  the  presence  of  exhibits  of  this  kind  Carnegie 
was  readily  convinced  that  Coleman's  Pittsburg  scheme  was  not  • 
only  practicable,  but  likely  to  be  extremely  profitable.  This 
conviction  was  strengthened  by  the  prospect  of  an  additional 
outlet  for  the  product  of  the  Lucy  Furnace ;  and  on  his  return 
he  was  found  to  be  an  enthusiastic  supporter  of  the  Bessemer 
project.  Indeed,  he  volunteered  to  put  into  the  venture  the 
whole  of  his  European  profits,  in  addition  to  a  commission  of 
$75,000  which  he  had  made  the  previous  October  on  the  sale  , 


76  THE   STEEL   BUSINESS 

of  a  block  of  Oilman  bonds,  also  a  commission  won  through  the 
friendship  of  Colonel  Scott. 

Andrew  Carnegie  had  sailed  on  this  mission  in  April,  1872. 
During  the  same  month  Coleman,  Scott,  McCandless  and  the 
younger  Carnegie  entered  upon  a  real-estate  speculation.  They 
bought  the  Mowry  homestead  tract  in  Pittsburg  and  subdivided 
it  into  building  lots.  The  venture  resulted  in  a  large  profit, 
and  left  the  partners  in  good  financial  shape  to  enter  upon  their 
steel  enterprise.  On  Andrew  Carnegie's  return  with  his  golden 
sheaves  and  his  new  enthusiasm,  the  project  was  at  once  put 
into  execution.  On  January  ist,  1873,  Mr.  Coleman  took  up 
the  option  on  Braddock's  Field  for  himself  and  associates,  pay- 
ing the  sum  of  $59,003.30  for  the  entire  tract,  subject  to  a 
mortgage  of  $160,000;  and  on  the  I3th  of  the  same  month  the 
firm  of  Carnegie,  McCandless  &  Co.  was  organized  with  a  capi- 
tal of  $700,000.  Coleman  himself  put  $100,000  into  the  firm, 
Messrs.  Kloman,  Phipps,  McCandless,  Scott,  Stewart,  Shinn, 
and  the  younger  Carnegie  each  subscribed  $50,000,  and  An- 
drew Carnegie  added  $25,000  to  his  European  profits  and  put 
$250,000  into  the  venture.  For  by  this  time  his  ambition  to 
own  the  largest  individual  interest  in  all  the  enterprises  with 
which  he  connected  himself  had  become  definite,  although  it 
was  not  yet  the  absorbing  passion  it  became  later.  Thus  was 
started  the  great  enterprise  which  afterwards  became  famous  as 
the  Edgar  Thomson  Steel  Works. 

In  1874  the  legislature  of  Pennsylvania,  prompted  by  the 
widespread  ruin  of  the  panic,  passed  an  act  authorizing  the 
formation  of  limited  liability  companies ;  and  Kloman's  failure 
having  brought  home  to  the  other  members  of  his  firm  the 
danger  of  partnership  agreements,  they  took  advantage  of  the 
new  law,  and  on  October  I2th,  1874,  the  firm  of  Carnegie,  Mc- 

?   Candless  &  Co.  was  dissolved,  and  the  Edgar  Thomson  Steel 

-? Company,  Limited,  was  incorporated  with  a  capital  of  $1,000,- 

ooo  to  take  its  place.     On  October  3ist  the  unfinished  works 

N  at  Braddock  were  transferred  to  the  latter  corporation,  the  con- 


OX    THE    VERGE    OF  DISASTER 


77 


sicleration    being    $631,250.43,    subject    to    a     mortgage    now 
amounting  to  $201,000. 

The  works  were   laid   out   under  the  supervision  of  A.  L. 
Holley,  the  well-known  Bessemer  engineer,  who  offered  a  guar-    ' 
antee  that  the  plant  would  have  a  capacity  of  seventy-five  thou- 


A.   L.    HOLLEY, 

Builder  of  the  principal  Bessemer  Steel  Works  in  America. 

sand  tons  of  ingots  a  year.  Ground  was  broken  on  April  1 3th, 
1873.  Before  the  work  was  more  than  well  started,  however, 
the  panicjnvolved  the  firm  in  great  financial  difficulty ;  and  but 
for  the  high  standing  of  McCandless,  Stewart,  and  Scott,  the 
infant  industry  would  have  suffered  an  early  death.  As  it  was, 
an  issue  of  bonds  was  found  necessary.  These  conferred  on 


78  THE   STEEL    BUSINESS 

holders  the  right  to  exchange  them  within  three  years  for  paid- 
up  stock  in  the  company.  J.  Edgar  Thomson  took  a  hundred 
of  these  bonds;  and  Colonel  Scott,  true  to  his  traditional  help- 
fulness, took  fifty.  This  gave  the  firm  $i  50,000  at  a  time  when 
it  was  worth  double  that  amount ;  and  Gardiner  McCandless, 
son  of  the  chairman  of  the  company,  bought  about  $70,000  of 
the  bonds  for  himself  and  friends.  Besides  tiding  it  over  a 
period  of  difficulty  and  danger,  this  bond  issue  brought  to  the 
company  the  prestige  and  favor  of  President  Thomson  and 
Colonel  Scott,  as  was  found  as  soon  as  it  entered  the  market 
with  its  rails. 

While  the  works  were  in  course  of  construction  a  curious 
development  took  place  at  Johnstown,  which  greatly  benefited 
the  Edgar  Thomson  Company.  In  the  spring  of  1873  a  labor 
dispute  took  place  at  the  Cambria  Iron  Works.  The  trouble 
grew  out  of  an  extraordinary  situation.  Foreseeing  difficulty 
with  the  local  labor  union,  the  Cambria  Company  induced  its 
principal  men  in  all  departments  to  become  members  of  tlu 
organization ;  hoping  that  in  this  way  they  would  get  control  of 
it  and  manage  it  in  the  company's  interest.  For  some  reason 
these  men  failed  to  get  control,  and  a  strike  being  ordered  by 
the  union  they  had  no  alternative  but  to  obey,  at  least  for  the 
time.  Hoist  by  their  own  petard,  the  company's  officials  capped 
their  blunder  by  telling  these  foremen  that  their  situations 
would  be  forfeited  unless  they  brought  the  dispute  to  an  end. 
In  those  days,  as  we  have  seen  in  the  case  of  the  puddlers' 
strike  at  the  Union  Iron  Mills,  labor  disputes  with  capital  were 
in  an  elemental  stage;  and  it  is  barely  possible  that  the  simple 
measures  of  the  Cambria  officials  might  have  ended  the  trouble. 
But  Andrew  Carnegie,  hearing  in  New  York  of  the  dispute, 
returned  hastily  to  Pittsburg,  and  proposed  to  his  firm  that 
these  heads  of  the  Cambria  departments  be  invited  to  join  the 
new  works  at  Braddock.  This  was  done;  and  Capt.  William 
R.  Jones  having  accepted  the  invitation,  the  leading  men  in 
every  department  hastened  to  follow  his  example.  In  this  way 


JONES    THE   PEERLESS  79 

*  Carnegie,  McCandless  &   Co.  secured  a  corps  of  trained  men 
who  had  gone  through  the  costly  apprenticeship  of  Bessemer 
steel-making  at  the  expense  of  a  rival  concern.     It  was  a  master 
stroke,  and  at  once  carried  the  embryo  business  past  the  experi- 
mental stage.*     Among  the  men  thus  secured,  in  addition  to 

)  Captain  Jones,  who  was  without  a  peer,  were  Captain  Lapsley, 
superintendent  of  the  rail  mill,  John  Rinard,  superintendent  of 
the  converting  works,  Thomas  James,  superintendent  of  machin- 
ery, Thomas  Addenbrook,  head  furnace  builder,  F.  L.  Bridges, 
superintendent  of  transportation,  and  C.  C.  Teeter,  chief  clerk. 
Later,  scores  of  others  followed.  Indeed,  there  was  hardly  a 
skilled  workman  in  the  whole  of  the  Cambria  plant  that  did  not 
want  to  join  his  beloved  "Bill"  Jones;  and  when  the  Edgar 
Thomson  mill  was  ready  to  open,  many  of  them  did  so.  During 
the  panic  the  first  arrivals  were  put  on  board  wages,  and  kept 
about  the  place  until  the  trouble  was  passed,  and  the  work  of 
construction  resumed. 

Captain  Jones,  who  was  made  superintendent  of  the  works, 
was  probably  the  greatest  mechanical  genius  that  ever  entered 
the  Carnegie  shops.  He  had  passed,  moreover,  through  every 
branch  of  the  iron  and  steel  manufacture ;  and  there  was  nothing 
in  the  works  of  which  he  had  not  that  intimate  knowledge 
which  comes  through  the  hand  alone.  His  power  to  manage 
men,  joined  to  his  inventiveness  and  thorough  practical  training, 
made  him  the  most  conspicuous  personal  element  in  the  phenom- 
enal success  which  attended  the  enterprise  from  the  very  first. 
He  gave  many  valuable  suggestions  to  Mr.  Holley  while  the 
plant  was  being  erected,  which  were  frankly  adopted;  and  his 

•  later  inventions  added  enormously  to  the  profits  of  the  firm 
every  year  of  his  life,  and  long  after.     Even  in  1903  the  United 
States   Steel   Corporation  filed  a  bill  i:i  equity  to  restrain  the 

*  "  Its  [the  Edgar  Thomson  plant]  successful  operation  is  greatly  due  to  the 
large  experience  in  Bessemer  manufacture  of  Capt.  William  R.  Jones,  general 
superintendent  of  the  works  and  of  Capt.  Thomas  H.  Lapsley,  superintendent  of 
the  rolling  mill,  who  have  a  force  under  them  largely  composed  of  men  experienced 
in  the  manufacture  of  rails." — American  Manufacturer,  November  i8th,  1875. 


8o 


THE   STEEL    BUSINESS 


Pouring  hot  metal  into  the  Jones  Mixer. 


Jones  &  Laughlin  Steel  Company  from  using  the  famous  metal 
mixer  which  Captain  Jones  invented  for  the   Edgar  Thomson 

Company ;  .and  this  one  de- 
vice, used  as  it  is  in  every 
Bessemer  department  of  the 
great  steel  corporation,  is  still 
the  means  of  saving  it  mil- 
lions of  dollars  every  year. 
At  the  same  time  no  detail 
was  too  small  for  Captain 
Jones'  personal  attention. 
This  indeed  was  one  of  the 
secrets  of  his  success  with 
workmen.  He  was  ever  on 
the  lookout  for  their  comfort. 
He  personally  attended  to  the 
ventilation  of  the  shops ;  and,  as  another  little  illustration  of  his 
care,  may  be  mentioned  a  generous  supply  of  oatmeal  and  water 
for  drinking  purposes.  To 
Captain  Jones  is  also  due  the 
system  of  rewards  for  excep- 
tional service  which  after- 
wards characterized  the  ad- 
ministration of  all  the  Car- 
negie properties,  and  which 
has  since  been  extended,  with 
beneficial  effects,  to  all  the 
constituent  parts  of  the  Unit- 
ed States  Steel  Corporation. 

In  illustration  of  the  wise 
and  broad  views  held  by  Cap- 
tain Jones  in  regard  to  labor, 
an  interesting  letter  written 
by  him  at  this  time  may  here  be  quoted.  It  also  gives  some  data 
concerning  profits  which  are  worth  preserving.  It  is  as  follows  : 


Molten  metal  flowing  from  the  Jones  Mixer. 


A     VALUABLE   LETTER  81 

WORKS,  Feb.  25,  '75. 
E.    V.  McCandless,  Esq. 

DEAR  SIR  :  I  wrote  you  somewhat  hastily  last  night.  In 
regard  to  the  figures  I  gave  you  of  cost  of  mixture,  I  gave  you 
the  Cambria  figures,  viz.  mixture  at  $35  which  of  course  in- 
cludes spiegel  metal  which  is  (a)  great  deal  more  than  it  really 
cost  them.  A  friend  of  mine  who  has  gone  over  their  estimates 
carefully  gives  as  the  cost  of  one  ton  of  steel  rails  $44.  Now 
allow  for  at  least  15$  on  half  they  pay  for  labor  as  profit  they 
derive  from  their  store,  and  you  will  readily  see  that  the  profits 
of  the  Cambria  works  on  steel  are  simply  enormous. 

I  will  give  you  their  figures  again  in  a  more  intelligent 
manner : — • 

Cost  of  mixture  :  pig-iron  and  spiegel $35 

Credit  allowed  converting  department  per  ton  of  ingots. ...  9 

44        blooming  mill  per  ton  of  blooms 3 

44        rail  mill               44     44    44  rails 10 

Total  cost  of  producing  a  ton  of  rails $57 

Now  in  order  to  show  you  how  much  more  above  the  actual 
cost  they  put  their  figures,  I  know  of  plenty  of  men  who  will 
take  their  rail  mill  at  $4.00  a  ton  and  find  everything. 

Now  I  know  that  the  profits  in  manufacturing  steel  rails  are 
enormous.  If  such  works  as  the  Pa.  Steel  Co.  and  Newburgh, 
Ohio  can  manufacture  rails  and  make  money  these  works  can 
certainly  yield  very  handsome  profits. 

Now  I  will  give  you  my  views  as  to  the  proper  way  of  con- 
ducting these  works. 

ist.  We  must  be  careful  of  what  class  of  men  we  collect. 
We  must  steer  clear  of  the  West  where  men  are  accustomed  to  / 
infernal  high  wages.  We  must  steer  clear  as  far  as  we  can  of 
Englishmen  who  are  great  sticklers  for  high  wages,  small  pro- 
duction and  strikes.  My  experience  has  shown  that  Germans 
and  Irish,  Swedes  and  what  I  denominate  "  Buckwheats  " — 
young  American  country  boys,  judiciously  mixed,  make  the 
most  effective  and  tractable  force  you  can  find.  Scotsmen  do 
very  well,  are  honest  and  faithful.  Welsh  can  be  used  in  lim- 
ited numbers.  But  mark  me,  Englishmen  have  been  the  worst 
class  of  men  I  have  had  anything  to  do  with;  and  this  is  the 
opinion  of  Mr.  Holley,  George  and  John  Fritz. 

2nd.   It  should  be  the  aim  of  the  firm  to  keep  the  works  run- 
ning steadily.     This  is  one  of  the  secrets  of  Cambria  low  wages. 
The  workmen,  taking  year  in  and  year  out,  do  better  at  Cambria 
6 


82  THE    STEEL    BUSINESS 

than  elsewhere.      On  steady  work  you    can    calculate  on   low 
wages. 

3rd.  The  company  should  endeavor  to  make  the  cost  of  liv 
ing  as  low  as  possible.  This  is  one  bad  feature  at  present  but 
it  can  be  easily  remedied. 

These  are  the  salient  points.  The  men  should  be  made  to 
feel  that  the  company  are  interested  in  their  welfare.  Make 
the  works  a  pleasant  place  for  them.  I  have  always  found  it 
best  to  treat  men  well,  and  I  find  that  my  men  are  anxious  to 
retain  my  good  will  by  working  steadily  and  honestly,  and  in- 
stead of  dodging  are  anxious  to  show  me  what  a  good  day's  work 
they  have  done.  All  haughty  and  disdainful  treatment  of  men 
has  a  very  decided  and  bad  effect  on  them. 

Now  I  have  voluntarily  given  you  my  views.  I  have  felt 
this  to  be  a  necessity  on  my  part; -for  I  am  afraid  that  unless 
the  policy  I  have  marked  out  is  followed  we  need  not  expect  the 
great  success  that  is  obtainable.  These  suggestions  are  the 
results  of  twenty-five  years'  experience  obtained  in  the  most  suc- 
cessful iron  works  in  this  country : — Crane  and  Thomas  Iron 
Works,  Port  Richmond  Iron  Works,  and  the  Cambria  works. 

You  are  at  liberty  to  show  this  letter  to  your  father  and  Mr. 
Coleman;  otherwise  regard  it  as  a  confidential  letter. 

Yours  truly 

•W.  R.  JONES. 

The  converting  works  were  completed  in  August,  1 875  ;  and 
on  the  22d  of  that  month  the  first  blow  was  made.  On  Sep- 
tember ist  the  first  rail  was  made,  and  a  piece  of  it,  made  into 
a  paper  weight  and  stamped  with  this  date,  presses  on  this  page 
as  it  is  written. 

At  this  date  Bessemer  steel  production  in  America  had  pro- 
gressed to  important  proportions,  the  output  of  the  country  for 
1875  being  375,517  tons.  Of  this  amount  290,863  tons  were 
rolled  into  rails.  The  business  had  grown  from  3,000  tons  in 
1867.  In  England  Bessemer  steel  rails  had  been  known  since 
1857;  so  that  in  no  sense  was  the  Edgar  Thomson  Company 
a  pioneer.  It  is  indeed  noteworthy  that  in  anticipation  of  the 
change  from  iron  to  Bessemer  steel  which  every  railroad  man 
foresaw,  the  production  of  iron  rails  in  the  United  States  fell 
from  900,000  tons  in  1872  to  500,000  tons  in  1875.  In  this 


RAILROAD   FAVORS  83 

one  decade  the  output  of  steel  rails  multiplied  nearly  thirty 
times — from  34,000  tons  in  1870  to  954,460  tons  in  1880. 
The  subsequent  advance  has  also  been  great ;  for  from  less  than 
a  million  tons  of  steel  rails  produced  in  1880,  the  output  rose 
to  3,000,000  tons  in  1902,  while  the  price  had  fallen  from  $106 
a  ton  in  1870  to  $17  a  ton  in  1898. 

Many  things  combined  to  make  the  Edgar  Thomson  enter- 
prise a  success  from  the  start ;  and  in  so  far  as  these  were  fore- 
seen and  planned,  they  serve  as  evidence  of  the  consummate 
skill  of  its  projectors.  Coleman  must  be  credited  with  the 
great  advantage  which  resulted  from  the  intimate  relations  the 


The  Edgar  Thomson  steel  works  in  1875. 

firm  had  with  the  chief  officials  of  the  Pennsylvania  Railroad. 
It  was  he  who  induced  Stewart  and  Scott  to  join  the  scheme. 
To  him  also  was  due  the  exceptional  pains  taken  to  educate 
Andrew  Carnegie  in  the  merits  of  the  enterprise,  and  thus  indi- 
rectly to  reach  Carnegie's  late  associates,  Mr.  J.  Edgar  Thomson 
and  Colonel  Scott.  That  these  important  men  favored  the 
company  which  bore  the  name  of  one  of  them  is  evidenced  by 
the  fact  that  some  of  the  directors  of  the  railroad,  who  were 
interested  in  rival  concerns,  presently  insisted  upon  a  fair  divi- 
sion of  the  Pennsylvania's  patronage,  so  that  a  portion  of  their 
orders  for  rails  afterwards  went  to  the  steel  works  at  Johnstown 
and  Harrisburg. 

In  regard  to  the  charges  of  preferential  treatment  in  the 
matter  of  freight  rates  which  have  often  been  made  in  this  con- 


84  THE    STEEL    BUSINESS 

nection,  it  can  be  said  in  all  frankness  that,  while  they  were  not 
unfounded,  they  were  greatly  exaggerated.  The  Edgar  Thom- 
son Company  got  exactly  the  rates  and  rebates  that  other  ship- 
pers of  equal  importance  had.  Full  local  rates  were  paid;  but, 
owing^to  the  saving  to  the  railroads  resulting  from  the  steel 
company's  system  of  loading  cars,  and  even  at  times  making  up 
the  train,  it  was  only  fair  that  the  latter  should  share  in  the  re- 
sults of  this  economy.  So  there  was  established  a  system  of 
rebates.  A  monthly  statement  of  the  sums  paid  for  freight  and 
due  in  rebates  was  made  out ;  and  the  rebates  were  paid  almost 
as  soon  as  the  statements  were  presented  to  the  railway  com- 
pany. While  these  sums  were  considerable,  and  probably  in- 
;  ured  to  the  injury  of  com- 

peting iron-rail   makers  in 
is&  the  same  district,  they  were 

no  greater  than  those  re- 
L  <  ceived  by  other  manufact- 

urers   of    steel    rails    who 
loaded    their     own     ship- 
J  „  ments. 

At  first  this  rebate  sys- 
tem was    confined   to    the 

"There  goes  that  bookkeeper." 

Pennsylvania    lines  ;    but 

presently  President  Garrett,  of  the  Baltimore  and  Ohio  Rail- 
road, who  had  some  suspicion  of  the  facts,  sent  representatives 
to  Pittsburg  to  learn  the  reason  of  the  apparent  discrimination 
against  his  road.  As  a  result  of  their  report  Mr.  Shinn,  general 
manager  of  the  Edgar  Thomson  works,  received  an  invitation  to 
visit  Mr.  Garrett  in  Baltimore,  when  an  arrangement  similar  to 
that  in  force  with  the  Pennsylvania  company  was  made,  and 
the  traffic  was  then  divided  between  the  two  roads. 

Another  factor  which  contributed  in  no  small  degree  to  the 
success  of  the  firm  was  the  voucher  system  of  accounting  which 
Mr.  Shinn  introduced.  This  had  long  been  used  by  railroads, 
and  the  Standard  Oil  Company's  accounts  were  thus  kept;  but 


SHINN'S   SYSTEM  OF  ACCOUNTS  85 

it  was  not  in  general  use  in  manufacturing  concerns,  and  the 
Edgar  Thomson  Company  was  the  first  to  adopt  it  in  Pittsburg. 
No  order  i  :>r  rails  was  ever  accepted  until  there  had  first  been 
ascertained  the  actual  cost  of  every  element  entering  into  their 
manufacture,  and  options  obtained  on  the  pig-iron  of  which  they 
were  to  be  made.  An  eloquent  testimony  to  the  efficiency  of 
this  method  of  accounting  was  given  by  a  workman  engaged 
in  building  a  heating-furnace :  "  There  goes  that book- 
keeper. If  I  use  a  dozen  bricks  more  than  I  did  last  month,  he 
knows  it  and  comes  round  to  ask  why !  "  This  was  no  exag- 
geration. The  minutest  details  of  cost  of  materials  and  labor 
in  every  department  appeared  from  day  to  day  and  week  to  week"  „ 
in  the  accounts ;  and  soon  every  man  about  the  place  was  made 
to  realize  it.  The  men  felt  and  often  remarked  that  the  eyes 
of  the  company  were  always  on  them  through  the  books.  If  the 
workmanship  was  exceptionally  good,  or  the  output  beyond  the 
high  average  which  was  insisted  upon,  the  head  of  the  depart- 
ment received  a  letter  of  congratulation  and  perhaps  a  present  at 
Christmas.  If  it  fell  behind  in  either  quality  or  output,  the 
fact  was  promptly  brought  to  his  notice,  and  Captain  Jones  him- 
self would  see  if  the  fault  lay  in  the  machinery.  If  it  did,  he 
generally  knew  how  to  remedy  it.  If  the  defect  was  in  the  \ 
human  machine,  and  reproof  did  not  suffice  to  correct  it,  the 
man  was  replaced  by  the  understudy  which  Jones  usually  had 
trained  in  view  of  such  a  contingency.* 

In    1877  it  was  found  that   more  steel  ingots  were  being 


*  Dr.  Frank  Cowan  has  written  a  unique  poem  on  the  contrast  presented  by 
the  actual  condition  of  Braddock's  Field  with  that  of  the  day  of  the  battle  on 
July  gth,  1755.  Here  are  a  couple  of  verses  : 

Where  the  cannon  of  Braddock  were  wheeled  into  line. 

And  swept  through  the  forest  with  shot  and  with  shell — 
But  woe  to  the  Britons!     In  vain  they  combine 

The  thunder  of  heaven  and  the  lightning  of  hell! 
There  the  turning  converter,  while  roaring  with  flame, 

Pours  out  cascades  of  comets  and  showers  of  stars, 
While  the  pulpit-boy,  goggled,  looks  into  the  same — 

Thinking  little  of  Braddock  and  nothing  of  Mars. 


86  THE    STEEL   BUSINESS 

made  than  the  rail-mill  could  roll ;  and  an  attempt  was  made  to 
capture  the  local  market  for  merchant  steel.  Some  billets  of 
high-carbon  steel  were  made  and  submitted  to  a  firm  of  buggy- 
spring  makers.  To  their  astonishment  the  material  was  satis- 
factory ;  and  they  gave  a  large  order  for  billets  at  three  cents  a 
pound.  Then  some  samples  of  axle  steel  for  cars  were  sub- 
mitted to  the  Pennsylvania  Railroad  Company,  and  subjected  to 
tests  by  experts  who  did  not  know  that  they  were  not  the  cruci- 
ble steel  usually  employed  for  car-axles.  Again  the  tests  were 
satisfactory,  and  large  orders  resulted.  Next  came  the  more 
difficult  test  of  making  steel  for  plow-shares,  which  required  a 
soft  ductile  metal  capable  of  being  welded  to  sheets  of  crucible 
steel.  Even  these  severe  conditions  were  met.  Finally  the 
firm  made  steel  capable  of  being  rolled  cold  down  to  a  paper 
thinness  for  use  as  stove-pipe,  roofing-channels  and  cartridge 
cases  stamped  out  of  the  sheet.  So  that,  two  years  after  the 
realization  of  his  dreams,  Tom  Carnegie  had  the  satisfaction 
of  showing  to  his  brother  as  many  varieties  of  excellent  steel 
made  at  the  Edgar  Thomson  works  as  he  had  previously  seen 
in  England.  But  by  this  time  the  elder  Carnegie  was  the  most 
enthusiastic  member  of  the  company  and  needed  no  such  re- 
minders. 

The  profits  of  this  line  of  business  were  very  great ;  but  the 
capacity  of  the  rail-mill  having  been  enlarged,  and  the  demands 
of  the  railroads  ever  increasing,  the  company  abandoned  the 
manufacture  of  merchant  steel  for  the  time  being  and  returned 
to  the  exclusive  production  of  rails.  The  demand  that  had  thus 
been  created,  suddenly  found  itself  shut  off  from  supplies ;  and 


Where  the  guns  of  the  foe  were  revealed  by  a  flash — 

A  report — and  the  fall  of  the  killed  and  the  wounded, 
Till  the  woods  were  ablaze,  and  a  deafening  crash 

With  the  wail  of  the  wounded  and  dying  resounded  ; 
There  the  ingot  aglow  is  drawn  out  to  a  rail, 

While  the  coffee-mill  crusher  booms,  rattles  and  groans, 
And  the  water-boy  hurries  along  with  his  pail, 

Saying,  Braddock  be  blowed!  he's  a  slouch  to  Bill  Jones. 


A    RIVAL    IN   THE   FIELD  87 

an  interesting  development  resulted.  This  was  the  establish- 
ment of  a  rival  converting  plant  at  Homestead  by  the  group  of 
manufacturers  who  had  been  educated  in  the  use  of  Bessemer 
steel  in  place  of  the  more  costly  crucible  steel  which  they  had 
previously  used.  Pending  the  erection  of  the  new  plant,  an 
enterprising  firm  of  Pittsburg  brokers  got  Mr.  McCandless,  the 
former  bookkeeper  of  the  Edgar  Thomson  Company,  to  go  to 
England  to  buy  the  merchant  steel  necessary  to  fill  local  de- 
mands. In  two  years  this  firm  sold  nearly  two  million  dollars' 
worth  of  English  steel  at  a  profit  of  $5  to  $15  a  ton,  after  pay- 
ing forty- five  percent,  duty  and  both  ocean  and  railroad  freights. 
At  the  end  of  two  years  the  Edgar  Thomson  Company  sought 
to  head  off  the  independent  manufacturers  at  Homestead  and 
resumed  the  manufacture  of  merchant  steel.  The  import  busi- 
ness suddenly  ceased ;  and  these  profits  with  others  went  into 
the  erection  of  a  series  of  blast-furnaces  which  became  the  won- 
der of  the  iron-making  world. 

Up  to  this  time  the  Lucy  furnaces  had  been  supplying  most 
of  the  pig-iron  used  by  the  Edgar  Thomson  Company;  but  as 
the  members  of  the  latter  corporation  were  not  all  interested  in 
the  furnaces,  there  arose  differences  among  them  as  to  the 
proper  price  that  should  be  paid  for  pig-iron.  Although  these 
differences  were  finally  adjusted  by  a  sliding  scale  based  on  the 
price  of  steel,  the  discussion  developed  in  Shinn,  McCandless, 
Stewart,  and  gcott  a  desire  to  own  their  own  blast  furnace. 
The  desire  was  strengthened  by  the  phenomenal  profits  of  the 
Lucy  plant,  which  had  paid  for  its  construction  in  a  single  year. 
Eventually  an  agreement  was  reached,  and  furnace  A  was 
erected  at  Braddock. 

This  furnace  was  a  part  of  the  Kloman  wreck,  namely,  the 
little  charcoal  furnace  which  he  had  built  at  Escanaba.  It  was 
bought  for  a  mere  song — a  little  over  $16,000 — and  such  parts 
as  could  be  transported  were  brought  down  and  installed  at  the 
Edgar  Thomson  works.  This  was  in  1879.  Mr.  Julian  Ken- 
nedy was  put  in  charge  of  its  erection,  and  afterwards  of  its 


88  THE    STEEL    BUSINESS 

operation.  It  was  "blown  in"  in  January,  1880,  and  yielded 
442  tons  of  pig-iron  the  first  week.  In  view  of  the  fact  that  its 
cubical  capacity  was  but  6,396  feet  compared  with  15,000  feet 
in  the  Lucy  Furnace,  this  large  product  excited  great  astonish- 
ment. The  fourth  week,  however,  it  made  537  tons;  and  dur- 
ing the  following  month  (March)  its  output  reached  a  total  of 


JULIAN  KENNEDY. 

2,760  tons,  while  the  coke  consumption  was  reduced  by  May  to 
1,945  pounds  per  ton  of  iron  produced.  Later  the  output  of  a 
single  week  ran  up  to  671  tons,  and  the  iron-making  world 
regarded  the  achievement  with  wonder. 

In  April,  1880,  a  second  furnace,  constructed  by  Mr.  Ken- 
nedy, was  put  in  blast,  which  in  its  third  month  showed  an 
output  of  4,318  tons,  and  at  the  end  of  the  first  half  year  was 
making  the  marvellous  total  of  4,722  tons  in  a  single  month. 


A    GREAT  EVOLUTION  89 

During  the  first  twelve  months  this  furnace  produced  48, 179 
tons.  In  1883  a  third  furnace  was  put  in,  and  in  its  second 
month  passed  all  previous  records  by  a  yield  of  6,045  tons;  and 
in  the  first  twelve  months  made  65,947  tons  of  pig-iron.  Dur- 
ing the  next  three  years  two  other  furnaces  were  erected ;  and 
in  December,  1885,  one  of  them  yielded  6,451  tons,  the  total 
for  twelve  months  being  74,475  tons.  In  October,  1886,  still 
another  furnace  was  "blown  in,"  and  in  January,  1887,  three 
months  afterwards,  it  produced  8, 398  tons  on  a  coke  consump- 
tion of  1,935  pounds  per  ton  of  pig-iron.  Its  total  output  for 
twelve  months  was  88,940  tons.  These  were  the  world  records 
at  the  time ;  but  changes  in  the  construction  of  one  of  the  other 
furnaces,  made  under  the  supervision  of  Mr.  James  Gayley, 
one  of  the  ablest  of  the  so-called  "young  geniuses,"  brought 
the  monthly  record  in  December,  1889,  to  10,603  tons  on  a 
coke  consumption  of  only  1,756  pounds!  These  figures  indi- 
cate at  once  the  rapid  growth  of  the  business  of  the  Edgar 
Thomson  Steel  Company  and  the  proportionate  advance  made 
by  its  superintendents  in  the  art  of  iron  production.  Both  rec- 
ords, at  that  time  incomparable  even  in  this  great  land  of 
rapid  growth,  have  since  been  repeatedly  broken  by  the  same 
firm. 

Here  this  great  evolution  may  be  seen  at  a  glance : 

FIRST  FURNACE. 

Pounds  of  coke 
Years  and  months.  Tons  produced.  ,  . 

per  ton  of  iron. 

1880 — April  2, 723  2,  536 

May 3,718  2,574 

June 4,318  2,344 

July 4.345  2,706 

August ....    4, 60 1  2, 8 1 1 

September 4,221  2,757 

October 4, 722  2, 736 

SECOND   FURNACE. 

1882 — Second  month 6,045  2,617 

Average  for  twelve  months 5,495  2, 570 

Best  month 6, 131  2, 387 


THE   STEEL    BUSINESS 


THIRD    FURNACE. 

Years  and  months.  Tons  produced.         P°Unds  °ff  C°ke 

per   ton  of  iron. 

1885— October 6,320  2,396 

November 6. 306  2, 396 

December 6,451  2,172 

1886 — January  and  February Shut  down. 

March 6,352  2.105 

FOURTH    FURNACE.* 

1886 — November 6,  735  2, 128 

December 7, 494  2, 105 

1887— January 8,398  1,935 

1889— October 6,512  2,450 

November  9,097  1,897 

December 10, 603  i ,  756 

1890 — January 10,  536  I,  736 

February 8,954  ^859 

March 9-941  I»845 

April 10,075  1,847 

May 10,035  1,884 

Hardly  less  remarkable  were  the  results  achieved  in  the  con 
verting  and  rail  departments.  In  the  four  months  ending  De- 
cember, 1875,  6»555  tons  °f  rails  were  produced,  although, 
through  a  scarcity  of  Spiegel,  the  works  lost  two  weeks.  At 
this  time  a  thousand  tons  a  month  was  considered  a  good  aver- 
age for  the  first  year  of  a  two  five-ton  converter  plant.  In  the 
twenty-six  working  days  of  January,  1876,  the  product  of  433 
blows  was  2,550  tons  of  ingots,  or  2,055  tons  of  rails.  In  a 
single  week  in  February  119  heats  gave  707  tons  of  ingots, 
while  the  blooming -mill  passed  709  tons,  and  560  tons  of  rails 
were  rolled.  During  the  first  full  year  of  its  operation  (1876) 
the  mill  produced  45,563  tons  of  steel.  The  tonnage  of  rails 
was  32,228.  In  January,  1877,  the  product  of  a  week  was 
more  than  double  the  extraordinary  record  of  the  preceding  Feb- 
ruary;  the  output  being  1,543  tons  of  ingots  and  1,129  tons  °f 
rails.  The  way  this  was  done  is  naively  explained  by  a  local 

*  Twelve  years  later  one  of  the  above  furnaces  produced  in  one  month, 
December,  1902,  a  total  of  17,449  tons  °f  pig-iron  on  an  average  coke  consump- 
tion of  1,875  pounds. 


AMAZING  RECORDS  91 

journalist  of  that  day:  "Mr.  Campbell,  a  roller,  ten  days  or 
two  weeks  ago,  rolled  540  rails  in  eleven  and  a  half  hours,  which 
is  1 08  more  than  the  usual  run  for  twelve  hours.  This  put 
John  Little,  another  roller,  on  his  mettle,  and  last  Thursday 
night  he  rolled  600  thirty-foot  rails  in  eleven  and  a  half  hours 
— thus  beating  his  competitor  by  60  rails  and  the  usual  run  by 
1 68  rails.  John  may  be  Little,  but  the  Edgar  Thomson  wants 
that  Little  here  below,  and  wants  that  Little  long !  "  In  the 
twenty-four  working  days  of  the  following  February,  915  blows 
produced  5,993  tons  of  ingots;  4,474  tons  of  rails  were  rolled 
and  182  tons  of  billets.  On  the  26th  of  February  the  day's 
product  was  383  tons  of  ingots — half  as  much  as  was  produced 
in  a  week  the  year  before.  The  product  for  March  was  8,002 
tons  of  ingots. 

A  little  less  than  two  years  before  this  Mr.  A.  L.  Holley, 
then  managing  the  Rensselaer  Steel  Works  at  Troy,  wagered 
the  Hon.  John  A.  Griswold,  one  of  the  proprietors,  that  their 
Bessemer  plant  (two  converters)  could  produce  in  one  month 
1,500  tons  of  ingots.  He  won  his  bet,  of  course;  and  the  fig- 
ures i, 500  and  8,000  mark  the  advance  of  American  steel- mak- 
ing at  this  time  in  twenty-three  months. 

This  rate  of  progress  was  maintained  during  the  next  two 
years.  In  September,  1879,  the  Edgar  Thomson  beat  all  the 
records  of  two-converter  plants  by  producing  10,788  tons  of 
ingots.  The  tonnage  of  a  single  day  was  519,  of  a  week,  2,536. 
The  output  for  the  year  (1879)  was  107,877  tons  of  ingots,  of 
which  76,043  tons  were  rolled  into  rails.  In  November  the 
two  converters  produced  13,116  tons  of  ingots,  and  the  mill 
10,037  tons  of  rails.  The  total  rails  for  the  working  year,  nine 
months  and  twenty-nine  days,  was  100,094  tons.  Incidentally 
the  profit  of  the  Edgar  Thomson  works  for  1880  amounted  to 
$1,625,000;  and  there  were  orders  booked  for  8o,OQO  tons  for 
the  following  year. 

The  known  facts — of  course  no  outsider  knew  the  profits, 
which  are  now  made  public  for  the  first  time — produced  surprise 


92  THE    STEEL    BUSINESS 

and  chagrin  in  competing  plants.  In  England  the  news  was 
received  with  doubt.  "An  almost  incredible  statement,"  said 
E.  Windsor  Richards,  the  British  steel  manufacturer  ;  and  when 
Captain  Jones,  in  a  paper  read  before  the  British  Iron  and  Steel 
Institute,  gave  details  and  dates,  incredulity  gave  way  to  con- 
sternation, for  it  was  plainly  to  be  seen  that  England's  suprem- 
acy in  steel  was  at  an  end.  Here  is  the  amazing  record  in 

detail  : 

NOVEMBER,    1880. 
Number  of  vessels,  2.  Blows,    1,746. 

Average  charge,  7^  tons. 
Tons  of  Ingots  ..............................    I3,n6££|£ 

Blooms  ..............................    12,  i68|£££ 

Rails  .................................    ".037tHt 


Billets 
Merchant  blooms 


Total  finished  product  .....................    11,100 

At  this  date  the  Edgar  Thomson  had  held  the  record  for 
nearly  three  years.  During  the  next  six  months  it  beat  this 
record  out  of  shape.  In  the  first  six  months  of  1881  the  two 
converters  produced  76,756  tons  of  ingots  as  against  55,428 


A  train  of  rolls. 


tons  for  the  corresponding  period  of  1880 — an  increase  of  thir- 
ty-eight per  cent.  The  best  twenty-four  hours'  work  was  623 
tons.  The  product  of  a  week  was  3,433  tons;  the  best  month, 
14,033  tons — more  than  nine  times  the  tonnage  of  Holley's  bet 


CAPTAIN  JONES'    TRIUMPH  93 

six  years  before !  The  rail-mill  in  the  same  time  produced 
65,087  tons  as  against  43,372  tons  in  the  corresponding  half  of 
1880 — an  increase  of  a  fraction  over  fifty  per  cent.  The  aver- 
age weekly  yield  of  rails  was  2,503  tons  as  compared  with  1,664 
tons  in  1880. 

These  newer  facts  were  again  presented  by  Captain  Jones 
to  the  British  Iron  and  Steel  Institute  ;  and  before  the  astonished 
Englishmen  had  time  fully  to  digest  them,  he  sent  a  fresh  record  : 

November,  1881 — Ingots 16, 193  tons. 

Rails 13,646 

Best  24  hours'  work — Ingots 700 

"     "       "         "         Rails 608 

Best  week's  work — Ingots 3,902 

"         "  "        Rails 3,202 

Soon  afterwards  the  works  were  enlarged  and  the  direct  metal 
process  was  introduced ;  but  the  product  was  not  proportion- 
ately great,  and  the  record  passed  from  Captain  Jones  to  Mr. 
Julian  Kennedy,  who  by  this  time  had  been  put  in  charge  of 
the  Homestead  works.  Captain  Jones'  great  and  noteworthy 
triumph  forms  one  of  the  most  picturesque  episodes  in  the  his- 
tory of  the  Carnegie  organization. 

*  For  purposes  of  comparison  a  few  details  of  the  product  of  the  earlier  steel 
works  in  America  may  here  be  given.  These  were,  like  the  Edgar  Thomson,  all 
two  five-ton  converter  plants,  working  eleven  turns  or  five  and  one-half  days  a 
week. 

Tons  Tons 

Tons  Ingots, 

month. 

500 

Harrisburg. 
1,700 
2,000 


1868     .              

Heats,            Heats, 
24  hours.         week. 

Ingots, 
24  hours. 

Ingots, 
week. 

1870  Troy  and  Marrisburg 

I 

Cambris 

1872   Harrisburg  

640 

187-? 

H  arrisburg 
.  .  25  to  30          180 

890 

1874,  Harrisbm  ;       

Cambria 
46               189 

956 

"      Troj 

CQ 

267 

"      Troy 

IQC 

072 

*'      Cambria.  . 

211 

2,899 
3,526 

These  were  all  two  five-ton  converter  plants  working  eleven  turns  or  five  and 
one-half  days  a  week. 


CHAPTER    VII 
SOME    INSIDE    FINANCIAL   HISTORY 

THE  striking  achievements  just  set  forth  formed 
a  legitimate  source  of  pride  and  exultation 
in  the  firm;  and  the  gratification  of  every 
member  was  increased  by  the  wondering 
comments  of  the  trade  and  the  public, 
whose  attention  was  invited  to  these 
mechanical  victories  by  officially  verified 
newspaper  notices  and  by  papers  and 
speeches  before  the  iron  and  steel  associations  in  England 
and  America.  Braddock  became  the  Mecca  of  iron  and  steel 
manufacturers  from  all  over  the  world. 

On  the  subject  of  profits  there  was  naturally  no  disposition 
to  take  the  public  into  the  confidence  of  the  firm.  The  protec- 
tion of  infant  industries  was  a  subject  on  which  there  was 
divided  opinion  in  the  council-chambers  of  the  nation;  and 
manufacturers  showed  a  proper  caution  in  concealing  the  extent 
of  their  gains.  Indeed,  the  Carnegies  at  this  time  accepted 
what  seemed  to  them  a  large  monetary  loss  rather  than  produce 
the  books  of  the  Edgar  Thomson  Steel  Company  in  court  in 
response  to  a  judicial  order.  Now,  however,  that  the  golden 
harvest  is  safely  garnered  and  beyond  the  reach  of  legislators 
and  others  who  might  "  break  through  and  steal,"  there  is  no 
reason  why  the  gratifying  results  of  the  government's  wise  pol- 
icy of  protection  should  not  be  set  forth. 

The  admirable  system  of  accounting  introduced  by  Mr. 
Shinn  enabled  the  Edgar  Thomson  managers  to  see  at  a  glance 
the  exact  cost  of  every  one  of  the  many  operations  entering  into 
the  manufacture  of  a  ton  of  ingots,  blooms,  or  rails.  Every 

94 


EARLY  COST  SHEETS  95 

month  cost  sheets  were  made  out  in  which  these  items  were 
given  to  the  hundredth  part  of  a  cent.  These  statements  were 
marvels  of  ingenuity  and  careful  accounting. 

The  first  was  issued  on  October  1st,  1875.  It  gave  in  de- 
tail the  output  and  cost  of  the  first  month's  run,  together  with 
the  name  of  the  purchasing  railroads  and  the  prices  received. 
It  was  a  gratifying  document  to  the  anxious  partners.  The 
output  for  September,  1875,  was  1,1  iQ^-f  J^  tons  of  rails.  Their 
cost  was  exactly  $57  a  ton,  including  all  charges,  even  to  office 
expenses  and  maintenance  of  the  plant.  The  prices  received 
averaged  $66.50  a  ton  at  the  works,  thus  leaving  a  clear  profit 
of  $9.50  a  ton,  and  a  total  of  over  $10,000  on  the  month's  work. 
In  the  second  month  the  output  was  i,8i7^-|J-j}-  tons,  which  cost 
$57.20  and  sold  for  $66.32.  At  the  end  of  the  year  the  aver- 
age of  four  months'  operations  showed  that  ingots  had  cost 
$44.33  a  ton,  blooms  $47.  17,  and  rails  $58.45.  The  average 
price  at  which  they  sold  was  a  fraction  under  $66  a  ton,  giving 
a  total  profit  on  rails  of  $41,970.06.  The  percentage  of  rails 
from  pig-iron  and  spiegel  was  eighty  and  fifty-six  hundredths  ; 
and  this  was  afterwards  used  as  a  basis  on  which  to  figure  the 
making  of  contracts. 

During  the  following  year  the  improvements  in  processes 
made  by  Captain  Jones,  already  referred  to,  greatly  increased 
the  output  and  reduced  the  cost.  On  the  other  hand,  prices  also 
fell.  Andrew  Carnegie  wrote  this  year  to  one  of  his  colleagues  : 

"  We  must  not  loose  sight  of  the  fact  that  the  great  products 
now  made  must  effect  prices.      I  look  for  Cost  to  be  reached  for 
a  short  time  say  5O50  at  mills  with  us.      Some  concerns  must 
stop,     therefore  any  orders  we  can  take  netting  above  52 50  had 
better  be  taken — 55$  at  mills  is  a  tall  price. — Penna  steel  [i.e. 
Pennsylvania  Steel  Co.]  has  offered  60$  Balto  to  Georgia  RR. 
but  I  hope  to  get  a  small  order — 

In  the  same  letter,  however,  he  waxes  enthusiastic  over  the 
future : 

"  What  do  you  really  figure  we  can   put  rails  at  cost — run- 


96  INSIDE  FINANCIAL   HISTORY 

ning  double  4000  Tons  per  Mo.  on  this  basis  —  Cant  we  shade 
50$     If  so  where  is  there  such  a  business  — 

And  so  alluring  is  the  picture  in  his  mind  that  in  the  next  sen- 
tence he  says: 

"  I  want  to  buy  Mr.  Coleman  out  &  hope  to  do  so.  —  " 

But  that  is  another  part  of  the  story. 

Concerning  his  great  expectations  at  this  time,  the  following 
extract  from  a  letter  of  his  to  Shinn,  dated  April  I3th,  1876,  is 
interesting.  He  estimates  future  profits  at  forty  per  cent,  per 
annum,  or  $300,000  net  on  a  capital  of  $750,000. 


J   6c*~Jis 


[Photographic  reproduction.] 

The  price  of  rails  this  year  (1876)  dropped  steadily  from 
$67  in  January  to  $52  in  December;  but  the  average  price  re- 
ceived by  the  Edgar  Thomson  Company  for  the  sixteen  months 
ending  December  3ist,  1876,  was  $60.61  6.  The  product  for 
the  year  was  32,228  tons,  and  for  sixteen  months  38,284-5^^. 


FIRS 7'   GREAT  PROFITS 


97 


tons.  The  cost  of  manufacture,  which  averaged  $56. q85  for 
the  first  seven  months,  had  dropped  to  $53. 19  for  the  second 
seven  months.  The  net  earnings  for  the  year  amounted  to 
$181,007.18  on  a  capital  issue  of  $731,500. 


The  Edgar  Thomson  Steel  Works  in  1890. 

The  output  of  rails  for  1877  was  42,826^-^  tons.  Both 
prices  and  cost  of  manufacture  show  a  remarkable  decline. 
They  are  as  follows  : 


Cost  at  Price 

E.  T.  works.  at  mills. 

January $46. 6776  $49.00 

February 44. 89  49.00 

March 44.  io28  49.00 

April 43. 585  49.00 

May 4S-6335  47-25 

June 42. 2803  46.50 


Cost  at  Price 

E.  T.  works.  at  mills. 

July $44.8760  $45-25 

August 42. 5554  44-75 

September 43.83°*  44.00 

October 42. oo48  42.25 

November 4O.I314  40.50 

December 40. 3  588  40.50 


It  must  not  be  inferred  from  this  that  during  the  later 
months  of  the  year  the  company  was  running  at  a  loss ;  for  the 
rails  made  in  November  and  December  had  been  sold  at  prices 
prevailing  nine  or  twelve  months  earlier.  At  the  same  time 


98 


INSIDE   FINANCIAL    HISTORY 


iw/4  UM 


vmtacvvttl   cli 


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PAGE  OF  FIRST  ANNUAL  REPORT, 

Photographic  copy  of  the  original  document. 


"  WHERE  IS    THERE   SUCH  A   BUSINESS!"    99 

profits  were  greatly  diminished,  and  the  year's  balance  sheet 
showed  only  a  net  gain  of  $36,673.33.  But  about  $115,000 
had  been  spent  on  the  works  and  some  $20,000  of  indebtedness 
had  been  paid  off.  As  a  matter  of  fact,  the  profits  of  all  the 
Carnegie  works  this  year  aggregated  $190,379.33. 

In  February  of  this  year  the  first  dividend  was  declared, 
being  twenty-five  per  cent,  in  scrip.  In  August  a  second  divi- 
dend of  fourteen  per  cent,  was  declared,  part  of  which  was  ap- 
plied on  stock  and  part  paid  in  cash.  In  this  way  the  capital 
was  raised  to  $1,000,000.  In  October  dividend  No.  3,  of  two 
and  three-fourths  per  cent.,  was  declared ;  making  a  total  for  the 
year  in  cash  and  stock  of  forty-one  and  three-fourths  per  cent. 

At  the  beginning  of  1878  Andrew  Carnegie  indulged  again 
in  his  habit  of  prophecy,  and  scribbled  for  the  benefit  of  one  of 
his  partners  his  great  expectations  for  the  year.  This  rough 
memorandum  is  not  very  clear  in  its  details,  but  it  shows  that 
further  reductions  in  cost  to  $38  were  expected,  while  the  price 
to  be  received  was  put  at  $42.50,  with  an  allotment  by  the  steel 
rail  pool  of  60,000  tons.  This  would  give  a  profit  of  $240,000 
from  rails,  and  other  additions  not  now  traceable  were  expected 
to  bring  the  total  net  profit  to  $250,000.  Well  might  he  ex- 
claim, "Where  is  there  such  a  business  !  " 

Let  us  see  how  the  prophecy  turned  out.  By  March,  1878, 
thanks  to  Captain  Jones'  excellent  practice  at  the  works,  the 
monthly  product  of  rails  had  reached  7>383|-|-J-§-  tons.  The 
cost  of  ingots  had  been  reduced  to  $29.  50  and  that  of  rails  to 
$37.77.  During  the  year  the  cost  of  making  rails  did  not  go 
more  than  a  few  mills  above  $38.  In  April  it  was  $38.o66 ; 
in  May,  $36.81  ;  in  June,  $37-925  ;  in  July,  $38.01 3  ;  in  August, 
$37.829  ;  in  September,  $36.98 7  ;  in  October,  $36.1 14  ;  in  No- 
vember, $36.41 5;  and  in  December,  $36. 525.  The  average 
price  at  which  they  were  sold  was  $42.50,  exactly  correspond- 
ing with  Carnegie's  guess.  The  net  profits  of  a  single  month 
(November)  amounted  to  a  fraction  over  $52,000;  and  Andrew 
Carnegie,  a  propos  of  lofty  heights,  writes  from  Sorrento : 


ioo  INSIDE   FINANCIAL    HISTORY 

"  Pyramids  &  Mt  Etna  &  Vesuvius  have  been  our  last  climbs 
— Mt  E  of  course  we  did  only  from  the  base,  Tell  Capt 
Jones  there  was  a  proud  little  stout  man  who  gave  a  wild  hurrah 
when  he  saw  E  T  ahead.  Was  nt  it  a  close  race  with  C  I. 
Co.  but  they  had  a  start,  besides  we  had  to  go  through  the 
measles  you  know  " 

The  earnings  of  the  Edgar  Thomson  works  this  year  were 
$401,800 — over  thirty-one  per  cent,  on  its  capital,  which  had 
been  increased  to  $1,250,000.  Andrew  Carnegie,  by  the  way, 
subscribed  for  the  whole  of  this  increase ;  and  a  year  later  was 


THEORY. 

< 4  We  are  creatures  of  the  tariff,  and  if  ever  the  steel 
manufacturers  here  attempt  to  control  or  have  any 
general  understanding-  among  them  the  tariff  would 
not  exist  one  session  of  Congress.  The  theory  of  pro- 
tection is  that  home  competition  will  soon  reduce  the 
price  of  the  product  so  it  will  yield  only  the  usual 
profit.  Any  understanding  among  us  would  simply  at- 
tempt to  defeat  this.  There  never  has  been  or  ever 
will  be  such  an  understanding."  —  Andrew  Carnegie,  in 
American  Manufacturer,  July  251 'h, 


shown  by  the  balance  sheet  to  owe  the  company  $175,000  on 
account  of  stock  subscription — a  simple  and  easy  method  of 
becoming  a  "majority  stockholder." 

The  next  year  the  price  of  rails  took  a  sharp  upward  spurt, 
reaching  $67  a  ton  in  December  and  $85  by  February,  1880. 
In  the  same  period  the  cost  of  manufacture  was  slightly  re- 
duced. In  January,  1879,  ra^s  cost  $38.6o6  a  ton  to  make,  and 
in  May,  $35.845.  During  the  first  six  months  of  this  year  the 
Edgar  Thomson  works  made  $252,854.  The  second  half  of  the 
year  the  gains  were  even  greater.  In  August,  with  rails  selling 
at  $48,  there  was  a  clear  profit  of  $10.50  a  ton  (pig-iron  had 


PROFITS   140   PER    CENT.  101 

gone  up  $12.50);  in  October  a  fraction  under  $15,  and  by  De- 
cember over  $22  a  ton  net  profit.  The  monthly  output  of  in- 
gots now  exceeded  10,000  tons,  and  of  rails  five  to  six  thousand 
tons.  "  Where  is  there  such  a  business  !  " 

These  golden  times  continued  throughout*  V/ie'  knowing 
year.  In  January  the  difference  between  j;h'e^  Sealing  giice>  of 
rails  and  the  cost  of  pig-iron  was  $53  a  ton,  the' former  being 
$75  and  the  latter  $22  a  ton.  The  next  month  it  was  $65,  and 
of  this  something  like  $40  a  ton  was  clear  profit  to  the  Edgar 
Thomson  Steel  Company,  who  were  running  day  and  night  and 


PRACTICE. 

Profit.  Loss. 

EDGAR  THOMSON  STEEL  WORKS. 

On  rails,  payment  by  rail  pool.  $123,983.28 

HOMESTEAD  STEEL  WORKS. 

Axles,         pool  assessments ..  $22,345.32 

Beams,           "               "             ..  29,392.84 

Channels,      "               "             ..  13,002.74 

Armor  plate  pool 100,842.59 

UPPER  UNION  MILLS. 

Zees,-         pool  assessment.  ..  5,518.70 

Angles,         "               "              ..  57,755.08 

Tees,              "              "              ..  4,456.32 

Beams,          "              "              ..  351.32 

Channels,     "               "              ..  366.97 

— From  Profit  and  Loss  account  of  Carnegie  Steel  Company  for  1899. 


had  orders  for  80,000  tons  of  rails.  Without  burdening  this 
narrative  with  further  details  of  costs  and  prices,  it  may  be 
briefly  stated  that  in  this  twelve  months  the  Edgar  Thomson 
works  made  a  profit  of  $1,625,000.  For  an  infant  industry  not 
out  of  its  swaddling-clothes  that  was  a  very  fair  showing;  and 
was  certainly  as  legitimate  a  cause  of  exultation  on  the  part  of 
the  members  of  the  firm  as  those  more  public  triumphs  in  me- 
chanics already  spoken  of.  The  highest  price  of  rails  reached 
this  year  was  $85  a  ton.  Who  shall  say  in  presence  of  these 
facts  that  protection  is  not  synonymous  with  prosperity? 

To  the   Carnegies   the  tariff  was   specially  helpful  at  thi? 


102  INSIDE  FINANCIAL    HISTORY 

time,  when  an  extraordinary  demand  arose  for  iron  and  steel  in 
all  its  forms.  The  American  manufacturers  were  unable  to 
meet  this  demand,  and  prices  rose  to  a  point  at  which  importa- 
tions of  foreign  steel  could  be  made  despite  the  high  duties. 
{From  '$'1  9,:OOc\Gfoo  in  1879  these  importations  rose  to  over 
$71,000,000  in  1880,  $60,500,000  in  1881,  and  $68,000,000  in 
:8§2. • "  Simultaneously  the  profits  of  the  Carnegie  companies 
rose  from  $512,068.46  in  1879  to  $2,000,377.42  in  1881,  and 
$2,128,422.91  in  1882;  for  while  the  cost  of  rails  was  between 
$34  and  $38.50,  the  average  price  received  during  these  years 
was  $56.26.  It  is  obvious  that  but  for  the  tariff  these  enor- 
mous gains  would  have  been  impossible;  and  the  magnificent 
series  of  blast-furnaces,  into  the  construction  of  which  these 
profits  went,  would  never  have  been  built.  Of  course,  the  rail- 
roads of  the  country  paid  the  difference;  but  they  eventually 
got  it  back,  and  more,  out  of  the  enormous  tonnage  of  ore,  coke, 
and  lime  needed  by  the  furnaces.  Here,  however,  we  are 
trenching  upon  debatable  ground ;  and  that  is  neither  necessary 
nor  desirable  in  a  work  of  this  kind,  which  aims  only  to  set  out 
the  facts  and  leave  the  reader  free  to  draw  his  own  conclusions. 
During  the  following  years,  before  Mr.  Frick  came  into  su- 
preme power  and  multiplied  the  Carnegie  profits  elevenfold  in 
eleven  years,  the  net  earnings  of  all  the  properties  whose  his- 
tory we  are  tracing  reached  the  following  annual  totals.  The 
average  price  of  steel  rails  for  these  years  is  also  given. 

1883 $1,019,233.04 $37-75 

4 , 1,301,180.28 30.75 

5  i,i9T>993-54 28.50 

6 2,925,350.08 34.50 

7 3,441,887.29 37.08 

8 1,941,555.44 29.83 

The  causes  of  this  abundant  prosperity  were  not  confined  to 
the  tariff,  however.  Some  of  them  have  been  briefly  adverted 
to  in  the  course  of  this  narrative ;  others  have  not  been  men- 
tioned. A  general  review  of  this  interesting  division  of  the 
subject  is  therefore  not  out  of  place  at  this  point  in  our  story. 


CAUSES   OF  SUCCESS  103 

First  and  foremost  among  the  causes  of  the  extraordinary 
success  of  the  Edgar  Thomson  works  is  the  fact  that  they  were 
planned  and  constructed  under  the  immediate  direction  of  the 
late  A.  L.  Holley.  In  his  day — he  died  in  1882 — Mr.  Holley 
was  the  most  experienced  Bessemer  steel  man  on  the  continent. 
It  was  he  who  negotiated  the  purchase  of  the  American  patents 
in  1864,  and  who  built  the  experimental  works  at  Troy.  He 
developed  them  into  a  commercial  success,  and  was  in  charge  of 
their  management  until  1867.  In  this  year  he  built  the  Har- 
risburg  Bessemer  plant  and  superintended  it  until  1869.  Then 
he  rebuilt  and  enlarged  the  Troy  works,  which  had  been  de- 
stroyed by  fire.  He  next  planned  the  Bessemer  works  at  Chi- 
cago. All  this  was  before  the  Edgar  Thomson  works  were  even 
thought  of;  and  so  completely  had  he  identified  himself  with 
the  English  process  of  steel-making  and  the  erection  of  Bes- 
semer converting  works,  that  when  the  Edgar  Thomson  scheme 
was  first  mooted  Mr.  Holley  was  the  only  man  in  the  country 
to  whom  a  prudent  manufacturer  would  confide  the  construction 
of  a  new  steel  plant.  There  were,  moreover,  certain  inventions 
and  improvements  of  his  without  which  no  converting  plant  was 
complete.  In  a  history  of  the  Bessemer  Steel  Industry  in 
America,  Mr.  Robert  W.  Hunt  thus  speaks  of  the  Edgar  Thom- 
son works  : 

"  In  arranging  these  works,  Mr.  Holley  made  many  improve- 
ments over  any  of  his  previous  efforts,  and,  assisted  as  he  was 
(by  Mr.  P.  Barnes,  resident  engineer,  and  Mr.  W.  R.  Jones), 
the  works  stand  to-day  as  a  fit  monument  of  the  progress  of  the 
Bessemer  process  in  this  country."  * 


*  It  is  a  little  singular  in  view  of  these  well-known  facts  that  Andrew 
Carnegie  should  claim  that  he  "  built  at  Pittsburg  a  plant  for  the  Bessemer  proc- 
ess of  steel-making,  which  had  not  until  then  been  operated  in  this  country." 
Mr.  Weeks,  editor  of  the  American  Manufacturer ',  commenting  on  the  comple- 
tion of  the  Edgar  Thomson  works  remarked  [September  gth,  1875]:  "  We  [in 
Pittsburg]  have  been  slow  to  take  advantage  of  the  Bessemer  process,  though  one 
at  least  of  the  owners  of  the  Bessemer  patents  for  this  country  is  a  prominent 
steel  manufacturer  of  this  city  [James  Park,  Jr.].  This  dilatoriness  is  the  more 
remarkable  as  there  has  not  been  the  least  doubt  as  to  its  success  and  value  both 


104 


INSIDE   FINANCIAL    HISTORY 


In  the  schedule  of  cost  of  the  Edgar  Thomson  works  is  an 
item,  under  patent  fees,  "$5,000  for  Holley's  Improvements," 
a  sum  equal  to  that  paid  for  the  license  to  use  the  Bessemer 

patents.      This     represents 
the  measure  of  their  value. 

The  mechanical  genius 
of  Captain  Jones,  however, 
refused  to  be  bound  by  pre- 
cedent, and  many  innova- 
tions were  made  in  the 
equipment  of  the  Edgar 
Thomson  works  by  his  force- 
ful insistence.  An  instance 
is  here  recalled : 

Captain  Jones  had 
ordered  a  certain  type  of 
open-topped  housing  for  the 
rail-mill  which  had  been 
found  unworkable  in  other 
plants.  "  But,  Mr.  Jones," 
remonstrated  Mr.  Holley  in 
his  gentle  way,  "how  can  you  justify  the  putting  in  of  open- 
topped  housings  when  you  know  that  they  tried  them  at  the 
Lackawanna  works  and  abandoned  them  ?  " 

"Why,"  replied  Jones  in  his  positive  way,  "they  put  them 


'And  why  in  Hades  shouldn't  I?' 


practically  and  commercially.  Indeed  it  is  to  this  country  and  to  an  American, 
Mr.  A.  L.  Holley,  that  we  are  indebted  for  some  of  the  most  valuable  inventions 
connected  with  the  Bessemer  plant,  inventions  that,  taken  in  connection  with  those 
of  the  two  Fritzes,  have  made  it  possible  with  an  American  plant  of  a  given 
nominal  capacity,  to  turn  out  two  or  three  times  as  great  a  product  as  with  the 
English.  We  have  so  often  referred  to  the  incredulous  astonishment  of  the  mem- 
bers of  the  British  Iron  and  Steel  Institute  when  Mr.  Holley  told  them  what  we 
were  doing  in  this  country,  that  we  need  not  repeat  the  statement  here. 

Notwithstanding  this  delay  in  taking  up  this  process,  Pittsburg  can  now  con- 
gratulate herself  that  she  has  as  fine  a  Bessemer  plant  as  the  world  can  boast, 
not  so  extensive  as  some,  but  as  complete  and  perfect  as  any  and  much  more  so 
than  others." 


SKILFUL    MANAGEMENT  105 

down  with  three-inch  round  iron  bolts.     I'm  putting  mine  in 
with  four-inch  square  steel  bolts. " 

"  I  grant  you,"  answered  Mr.  Holley,  "  that  if  you  put  them 
in  with  four-inch  square  steel  bolts  you  will  be  able  to  hold  them." 

"And  why  in  Hades  shouldn't  I  put  'em  in  with  four-inch 
steel  bolts  if  that  will  accomplish  what  I'm  after?  " 

In  this  way  Jones  was  constantly  making  little  changes  and 
improvements,  too  insignificant  to  patent  or  even  to  mention 
outside  of  the  works ;  but  they  did  much  to  ensure  the  perfect 
working  of  the  machinery.  The  writer  recalls  one  such  im- 
provement. It  was  only  a  couple  of  pieces  of  old  rail,  shaped 
to  throw  the  half-rolled  bloom  onto  a  moving  bed  as  it  came 
through  the  rolls ;  but  it  saved  the  labor  of  a  dozen  men  and 
did  the  work  better. 

But  greater  than  all  of  Jones'  inventions  was  his  progres-* 
sive  policy.  Familiar  with  all  sorts  of  machinery,  he  saw  to  it 
that  only  the  best  and  most  modern  appliances  were  installed; 
and  thereafter  he  was  quick  to  adopt  improvements  as  fast  as 
they  were  made.  The  young  men  whom  he  trained  ably  sec- 
onded him,  as  is  shown  in  the  remarkable  achievements  of 
Julian  Kennedy  and  Gayley  at  the  blast-furnaces,  and  by  Schwab 
and  Scott  at  Homestead.  The  famous  scrap-heap  for  outgrown, 
not  outworn,  machinery  was  instituted  by  Jones,  who  never  hesi- 
tated to  throw  away  a  tool  that  had  cost  half  a  million  if  a  bet- 
ter  one  became  available.  And  as  his  own  inventions  saved  the 
company  a  fortune  every  year,  he  was  given  a  free  hand.  Under 
this  greatest  of  all  the  captains  of  the  American  steel  industry 
a  group  of  younger  men  grew  up,  trained  in  his  broad  views  and 
habituated  to  his  progressive  methods;  so  that  when,  in  1889, 
he  was  removed  from  his  sphere  of  activity  in  a  horribly  tragic 
way  by  the  explosion  of  one  of  his  furnaces,  there  were  men 
ready  trained  to  take  up  his  work  and  continue  it.* 


*The  following  passages  are  from  a  beautiful  obituary  notice  of  Captain 
Jones,  written  and  published  by  the  late  Joseph  D.  Weeks,  who  was  so  well 
qualified  to  appreciate  his  genius:  "  He  was  a  Captain  of  Industry,  unsurpassed 


1 06  INSIDE  FINANCIAL    HISTORY 

Nor  can  the  important  services  of  Mr.  Shinn  be  overstated. 
As  related  in  another  place  in  a  letter  of  Andrew  Carnegie,  his 
associates  used  his  name  as  a  prayer  of  thanksgiving  every 
night  before  going  to  bed.  An  example  of  his  contributions  to 
the  prosperity  of  the  firm  may  be  added  to  those  given  else- 
where in  this  history. 

The  moulds  into  which  the  molten  steel  was  poured  out  of 
the  converting- vessels  were  at  first  made  out  of  a  grade  of  cast- 
iron  which  soon  fractured  under  the  extremes  of  temperature  to 
which  they  were  subjected.  The  loss  from  this  cause  at  one 
time  added  about  sixty  cents  to  the  cost  of  making  a  ton  of 
steel.  In  going  over  his  cost  sheets  one  day  with  Captain 
Jones,  to  try  to  find  some  detail  capable  of  judicious  pruning, 
Mr.  Shinn 's  attention  was  arrested  by  the  high  cost  of  ingot- 
moulds.  He  thereupon  worked  out  a  metal  mixture  capable  of 


as  an  organizer,  marvellous  in  his  knowledge  of  detail,  fertile  in  expedients  and 
invention;  always  planning  new  victories  and  winning  them.  His  success  is 
written  in  the  monster  establishment  at  Bessemer,  which  will  remain  a  monument 
to  his  energy,  his  skill,  his  achievements. 

The  position  he  filled  was  one  that  demanded  a  higher  order  of  executive 
ability  than  that  required  of  the  President  of  the  United  States  or  any  of  his 
cabinet,  and  this  fact  was  recognized  by  a  salary  equal  to  that  of  the  President. 
As  an  executive  officer  alone  he  was  great ;  but  in  addition  to  this  executive 
ability  his  position  demanded  the  possession  of  the  inventive  faculty  in  the  highest 
degree,  coupled  with  the  power  of  analysis  on  the  one  hand  and  of  generalization 
on  the  other  that  are  rarely  found  combined  in  any  one  man.  He  not  only  knew 
what  he  wanted  done  but  how  to  do  it.  Never  trammelled  by  precedent  he  set  all 
rules  at  defiance  if  he  could  more  surely  and  quickly  reach  the  object  sought  by  so 
doing. 

Many  of  the  inventions  of  details  that  have  made  other  inventions  successes 
and  have  placed  Bessemer  steel-making  where  it  is  to-day  are  his. 

And  yet  after  all  we  doubt  not  that  the  fact  that  would  give  him  the  most 
sincere  gratification  is  the  knowledge  that  he  preserved  in  such  a  high  degree  the 
respect,  the  love  of  the  thousands  that  were  under  him,  and  he  deserved  all  the 
love  they  bear  him  and  all  the  respect  they  pay  his  memory.  No  one  more 
honestly  and  with  more  singleness  of  purpose  strove  in  every  way  to  help  and 
benefit  those  under  him  than  Captain  Jones.  Himself  from  the  ranks  of  labor, 
he  never  forgot  the  fact  and  looked  at  all  questions  affecting  the  relations  of  em- 
ployer and  employed  in  the  works  he  managed  from  the  standpoint  of  both  of 
these  relations  ;  and  both  employer  and  employed  have  come  to  realize  that  his 
judgment  was  in  the  main  wise  as  they  have  always  believed  it  was  honest." 
— American  Manufacturer,  October  4th,  1889. 


SPIRIT  OF  COMPETITION  10; 

greater  resistance  to  alternations  of  heat  and  cold,  and  had  some 
moulds  cast  of  this  at  the  foundry  of  Macintosh  &  Hemphill. 
Instead  of  being  destroyed  after  less  than  twenty  heats,  as  here- 
tofore, the  new  moulds  withstood  the  strain  of  sixty  heats  or 
more;  and  the  ingot- mould-cost  per  ton  of  steel  dropped  from 
sixty  to  fifteen  cents.  On  a  product  of  10,000  tons  a  month, 
the  saving  was  over  $40,000  a  year — a  sum  almost  sufficient  in 
itself  to  determine  the  financial  success  or  non-success  of  the 
works  under  ordinary  conditions  of  trade.  Nor  was  this  all. 
The  new  moulds  were  made  of  Bessemer  iron ;  and  when  they 
broke  they  were  simply  passed  into  the  converter  and  made  into 
steel  rails. 

This  metal  mixture  was  kept  a  secret  for  some  years,  during  • 
which  the  Edgar  Thomson  Company  had  an  important  advan- 
tage over  competitors.  After  a  time  the  secret  was  given  to 
Leander  Morris,  in  whom  Andrew  Carnegie,  his  cousin,  had  an 
interest  of  a  peculiarly  close  and  confidential  nature.  This  is 
a  story  in  itself,  full  of  romance  and  pathos.  Mr.  Morris  was  a 
member  of  the  foundry  firm  of  Morris  &  Marshall,  and  for  years 
they  had  a  practical  monopoly  of  the  business  of  casting  ingot- 
moulds. 

Another  cause  of  success  is  to  be  found  in  the  spirit  of  com-  < 
petition  which  animated  every  man  about  the  place.     A  keen 
rivalry  had  existed  from  the  first  among  the  Bessemer  steel 
men;  and  this  was  intensified  by  the  building  of  the  Edgar 
Thomson  works,  with  all  the  improvements  resulting  from  Mr. 
Holley's  ten  years  of  experiments.     Captain  Jones  has  graphi-    , 
cally  told  the  story  of  this  rivalry  in  the  paper  already  referred 
to,  which  was  read  at  the  meeting  of  the  British  Iron  and  Steel 

Institute  in  May,  1881.     He  says: 

' 

"  Now  as  to  the  cause  of  the  great  output  of  American  steel 
works. 

On  the  introduction  of  the  Bessemer  process  in  America, 
quite  a  number  of  young  men,  who  believed  that  the  process 
would  revolutionize  the  metallurgical  world,  became  anxious  to 


io8  INSIDE  FINANCIAL   HISTORY, 

identify  themselves  with  its  development.  At  the  Troy  works, 
which  may  be  considered  the  pioneer  Bessemer  works  of  the 
country,  Mr.  A.  L.  Holley  was  applying  his  brilliant  talents  to 
the  perfecting  of  American  plants.  Forsythe,  of  the  North 
Chicago  works,  was  also  assiduously  studying  the  process.  A 
few  years  later  the  Pennsylvania  Steel  Works,  the  model  of 
nearly  all  the  subsequent  American  works,  were  constructed  by 
Mr.  Holley.  Some  years  later  still  the  Cambria  works  were 
built.  At  all  these  works  there  were  ambitious  young  men 
closely  studying  and  carefully  watching  all  possible  points  of 
development. 

From  the  Cambria  graduated  Mr.  R.  W.  Hunt,  general 
superintendent  of  the  Albany  and  Rensselaer  works;  Jones 
and  Fry,  at  present  connected  with  the  Cambria ;  Rinard,  of  the 
Edgar  Thomson  ;  Stanton,  of  the  Vulcan ;  Williams,  of  the  new 
Pittsburg  Bessemer  works ;  and  myself. 

Mr.  Holley,  as  editor  of  Van  Nostrand's  Eclectic  Magazine, 
a  few  years  ago,  records  as  follows  :  '  We  have  information  from 
the  (Penn.)  steel  works  that  on  Tuesday  of  last  week  they  had 
succeeded  in  making  eight  blows  or  conversions  in  ten  hours. ' 
I  quote  from  memory. 

Soon  the  Cambria  Iron  Works  commenced  to  creep  up  to 
thirty-six  heats  or  about  one  hundred  and  sixty  tons  in  twenty- 
four  hours.  After  the  dispersion  at  the  Cambria  works  attend- 
ant on  the  death  of  Mr.  George  Fritz,  one  of  the  ablest  of  Amer- 
ican metallurgists,  Mr.  Hunt  assumed  control  of  the  Bessemer 
department  of  the  Cambria  works.  A  strong  rivalry  imme- 
diately commenced  between  these  two  gentlemen  ;  and  great  was 
my  astonishment  at  this  time  on  receiving  from  Mr.  Hunt  a 
telegram  stating  that  'in  the  last  twenty-four  hours  we  have 
made  fifty  heats,  or  about  two  hundred  and  fifty  tons.'  This 
achievement  caused  great  surprise  in  the  Bessemer  world.  In 
the  meantime  Forsythe,  having  concluded  his  studies  at  Troy, 
had  assumed  the  reins  at  North  Chicago ;  and  reports  soon  cir- 
culated about  what  he  was  doing  there.  This  only  stirred  up 
Messrs.  Fry  and  Hunt  and  Liebert,  of  Bethlehem,  to  greater 
achievements ;  and  so  the  product  kept  on  increasing,  while 
we  of  tJie  Edgar  Thomson  were  compelled  (being  engaged  in  erect- 
ing the  works)  to  listen  to  tJieir  wonderful  stories.  In  1875  the 
Edgar  Thomson  began  operations,  followed  soon  afterwards  by 
the  Scranton  and  Vulcan  works,  while  the  Joliet  works  under 
an  efficient  organization  had  again  entered  the  field. 

In  the  latter  year  the  output  of  American  works  began  to 
assume  those  proportions  which  have  caused  so  much  surprise 


CAPTAIN  JONES'    EXPLANATION  109 

in  England.  The  output  soon  reached  1,500  tons  of  ingots  a 
week,  then  1,800  tons,  then  2,000  tons,  and  ultimately  increas- 
ing to  3,000,  3,100,  3,200,  and  3,300. 

I  am  frequently  asked  by  people,  'Where  will  you  Bessemer 
men  stop?  '  and  'What  is  the  limit  of  your  production?  '  I  can 
only  reply :  'Ask  some  one  who  knows  more  about  it  than  I  do.' 
But  I  really  believe  we  are  on  the  verge  of  the  elastic  limit  of 
production,  although  it  may  yet  reach  a  product  of  14,500  to 
15,000  tons  for  what  I  term  a  'long  month  '  of  twenty-one  days 
per  pair  of  converters.  [Julian  Kennedy  afterwards  brought  the 
record  to  over  19,500  tons.] 

The  output  of  American  works  is  governed  by  the  facili- 
ties for  getting  the  ingots  out  of  the  road.  This  is  the  sticking- 
point  just  now.  [This  difficulty  was  met  by  casting  the  ingots 
on  trucks  and  hauling  them  away  by  locomotives.]  Therefore 
the  works  that  cast  their  tonnage  in  the  least  number  of  moulds 
have  a  decided  advantage  in  reaching  the  ultimate  production  of 
the  present  American  or  Holley  plant.  The  race,  so  far  as  the 
Edgar  Thomson  works  are  concerned,  will  soon  cease.  A  few 
months  more  and  the  Edgar  Thomson  will  change  from  a  two 
seven-ton  converter  plant  to  a  three  ten-ton  plant,  and  then  our 
efforts  willbe  concentrated  upon  keeping  pace  with  the  Bethle- 
hem four-vessel  plant,  and  with  the  North  Chicago  and  Pennsyl- 
vania Steel  Company's  three-vessel  plants.* 

Next  to  the  strong  but  pleasant  rivalry  of  the  young  men 
who  have  assumed  control  of  the  works,  and  who  have  worked 
hard  and  faithfully  to  excel,  the  development  of  American  prac- 
tice is  due  to  the  esprit  de  corps  of  the  workmen  after  they  get 
fairly  warmed  to  the  work.  As  long  as  the  record  made  by  the 
works  stands  the  first,  so  long  are  they  content  to  labor  at  a 
moderate  rate ;  but  let  it  be  known  that  some  rival  establish- 
ment has  beaten  that  record,  and  then  there  is  no  content  until 
the  rival's  record  is  eclipsed. 

Another  marked  advantage  which  the  American  works 
have  is  the  diversity  of  nationality  of  the  workmen.  We  have 


*One  day  in  November,  1891,  the  mill  started  out  to  beat  the  best  day's 
record  of  the  South  Chicago  mill  of  the  Illinois  Steel  Company,  which  was  1,700 
tons.  The  attempt  was  a  remarkable  success,  as  the  following  figures  show  : 

Rails  made  in  twenty-four  hours !,924  tons. 

Ingots,  same  time 2,074    " 

Best  twelve  hours  (night  turn)  rails 981     " 

"        "      ingots 1,087    " 

Best  run  two  hours 201     ' ' 


no  INSIDE  FINANCIAL   HISTORY 

representatives  from  England,  Ireland,  Scotland,  Wales,  and  all 
parts  of  Germany,  Swedes,  Hungarians,  and  a  few  French  and 
Italians,  with  a  small  percentage  of  colored  workmen.  This 
mixture  of  races  and  languages  seems  to  give  the  best  results, 
and  is,  I  think,  far  better  than  a  preponderance  of  one  nation- 
ality. 

In  increasing  the  output  of  these  works,  I  soon  discovered 
it  was  entirely  out  of  the  question  to  expect  human  flesh  and 
blood  to  labor  incessantly  for  twelve  hours,  and  therefore  it  was 

v  decided  to  put  on  three  turns,  reducing  the  hours  of  labor  to 
eight.  This  proved  to  be  of  immense  advantage  to  both  the 
company  and  the  workmen,  the  latter  now  earning  more  in  eight 
hours  than  they  formerly  did  in  twelve  hours,  while  the  men  can 
work  harder  constantly  for  eight  hours,  having  sixteen  hours 
for  rest. 

Another  important  matter  connected  with  fast  working  is 

.  the  maintenance  of  the  machinery.  As  fast  as  the  weak  parts 
in  the  machinery  are  developed  they  are  strengthened.  In  all 
new  machinery  the  aim  is  to  get  an  excess  of  strength;  the 
usual  factor  of  safety  in  new  rolling  machinery  is  not  allowable. 
The  machinery  must  be  made  extra  heavy  and  strong,  so  that 
the  inertia  of  the  mass  will  swallow  all  strains  thrown  upon  it."  * 

Following  in  importance  the  protective  tariff,  the  mechani- 
cal excellence  of  the  works,  the  inventive  skill  of  its  managers, 
and  the  rivalry  of  competing  plants,  as  factors  in  the  extraordi- 
nary success  of  the  Edgar  Thomson  Steel  Company,  come  cer- 
»  tain  personal  influences.  These  were  subtle  and  vague,  and  not 
easily  traceable  except  in  results  which  were  rarely  visible  to 
outsiders.  As  a  consequence,  biographers  and  historians  have 
been  led  into  all  sorts  of  fanciful  conceits  concerning  the  rela- 
tive importance  of  some  of  the  individuals  connected  with  the 
concern. 

One  closely  associated  with  the  group,  being  asked  to  define 
the  functions  of  the  various  partners  in  the  Edgar  Thomson 
Company,  recently  made  the  following  trite  comparison  :  "  Shinn 
bossed  the  show;  McCandless  lent  it  dignity  and  standing; 


*  Which  recalls  Captain  Jones'  remark  to  Holley  on  the  advantage  of  heavy 
steel  bolts  to  hold  the  housings  of  the  rail-mill. 


A    HAPPY   SIMILE 


in 


Phipps  took  in  the  pennies  at  the  gate  and  kept  the  pay-roll 
down;  Tom  Carnegie  kept  everybody  in  a  good  humor,  with 
Dave  Stewart  as  his  understudy."  "And  Andrew  Carnegie?  " 
he  was  asked.  "  Oh,  Andy  looked  after  the  advertising  and 
drove  the  band  wagon !  "  was  the  ready  reply. 

With  due  allowance  for  its  humorous  exaggeration,  this 
blunt  comparison  fairly  represents  the  facts.  The  high  com- 
mercial and  social  standing  of  Mr.  McCandless  not  only  gave 
dignity  to  the  enterprise,  but  won  financial  support  for  it  in  its 
days  of  need.  Without  him,  the 
company  would  hardly  have  tided 
over  the  troublous  times  of  1873 
and  the  lean  years  following  the 
panic.  The  special  capacity  of  Mr. 
Phipps  has  been  abundantly  illus- 
trated in  connection  with 
preceding  enterprises.  Mr. 
T.  M.  Carnegie's  abilities 
were  too  numerous  and 
complex  to  be  summed  up 
in  a  sentence.  He  was  a 
man  of  sterling  integrity ; 
and  it  was  a  common  say- 
ing in  Pittsburg  that  his 
word  was  better  than  some  men's  bond.  He  had  remarkable 
judgment;  and  his  opinion  on  commercial  questions  was  valued 
above  that  of  much  older  and  more  experienced  men.  Quick 
and  keen  in  his  perceptions,  cautious  but  progressive  in  his 
ideas,  faithful  to  his  engagements,  and  just  in  all.  his  dealings, 
he  gave  to  his  company  that  which  corporations  are  habitually 
lacking,  namely,  a  conscience.  His  death  in  1886,  at  the  early 
age  of  forty- three,  was  a  loss  not  only  to  his  associates,  but  to 
the  whole  business  world  of  .Pittsburg.  To  this  day  all  who 
knew  him,  great  and  small,  rich  and  poor,  workman  and  master, 
revere  his  memory  and  regret  his  loss.  Mr.  Stewart  never 


'Andy  drove  the  band  wagon." 


112 


INSIDE   FINANCIAL   HISTORY 


sought  prominence,  and  was  content  to  the  day  of  his  death,  in 
1889,  to  merge  his  own  personality  in  the  organization  he  worked 
for.  Devoted  to  Tom  Carnegie,  he  allowed  no  personal  injury  to 
affect  his  loyalty  to  his  friend;  and  more  than  once  he  stoically 
accepted  the  rough  rebukes  of  the  elder  Carnegie  because  Tom 
wished  for  peace.  Once,  indeed,  exasperated  at  the  gibes  given 
at  his  own  table,  he  rose  in  anger,  saying  that  the  bounds  of  all 
reason  had  been  reached  and  the  laws  of  hospitality  outraged ; 

but  the  apology  which  Tom  arranged 
was  at  once  accepted  and  peace  was 
restored. 

The  part  at  first  selected  by  An- 
drew Carnegie  for  himself  was  the 
development  of  outside  trade  and  ' 
the  procurement  of  orders.  Here  he 
displayed  an  originality  so  marked 
that  it  amounted  to  gen- 
ius. Endowed  with  a 
ready  wit,  an  excellent 
memory  for  stories,  and 
a  natural  gift  for  reciting 
them,  he  became  a  social 
favorite  in  New  York 
and  Washington,  and 
never  missed  a  chance  to 
make  a  useful  acquaint- 
ance. His  mental  alert- 
ness, ready  speech,  and  enthusiastic  temperament  made  him 
a  delightful  addition  to  a  dinner  party;  and  many  an  uncon- 
scious hostess,  opening  her  doors  to  the  little  Scotchman  from 
Pittsburg,  has  also  paved  the  way  to  a  sale  of  railroad  material,  i 
Carnegie  early  found  that  his  power  to  promote  sales  grew  in 
proportion  to  his  own  importance.  His  natural  love  of  promi- 
nence was  thus  fortified  by  its  commercial  value ;  and  he  lost  no 
opportunity  of  adding  to  his  interest  in  the  firm.  As  a  result 


"An  unconscious  hostess.' 


UNFRIENDLY  RIVALRIES  113 

he  was  soon  regarded  as  the  sole  founder  and  builder  of 
the  enterprise  which  bore  his  name,  and  his  partners,  if 
thought  of  at  all,  were  ranked  with  the  other  machinery  of  tha 
works. 

At  first  Andrew  Carnegie's  attention  was  principally  occu- 
pied in  schemes  of  his  own — construction  companies  for  new 
railroads  and  bridges,  and  the  marketing  of  bonds.  But  as  the 
iron  businesses  in  which  he  was  financially  interested  grew  in 
importance,  he  gave  them  more  of  his  time  and  attention.  Re- 
lieved of  the  routine  of  detail  and  the  never-ending  cares  of 
management  which  were  his  partners'  daily  lot,  he  had  a  mind 
free  to  range  over  the  industrial  field,  picking  up  scraps  of 
information  concerning  the  requirements  of  railroads,  and  bring- 
ing news  of  many  a  large  contract.  Supplied  with  daily  reports 
of  the  product  of  every  department  of  each  of  the  works,  he  had 
leisure  to  make  comparisons,  and  to  prod  with  a  sarcastic  note 
any  partner  or  superintendent  whose  work  did  not  rank  with  the 
best.  In  time  he  became  very  expert  at  these  postal  proddings ; 
and  with  half-a-dozen  scathing  words  scribbled  on  the  back  of 
his  address  card,  he  could  spur  the  best  of  his  managers  to  still 
more  heroic  achievements.  Captain  Jones,  who  was  too  high- 
spirited  a  war-horse  to  brook  such  spurrings,  sent  in  his  resigna- 
tion with  almost  rhythmical  periodicity,  and  was  then  tempted 
back  into  harness  by  a  handsome  gift  and  still  handsomer  apol- 
ogy. As  he  put  his  head  into  the  halter  again,  he  would  fling 
a  gibe  at  the  other  managers  who  took  their  rowellings  more 
tamely.  "  Puppy  dog  number  three,"  he  would  say  in  sarcastic 
parody  of  the  scribblings  from  New  York,  "you  have  been 
beaten  by  puppy  dog  number  two  on  fuel.  Puppy  dog  number 
two,  you  are  higher  on  labor  than  puppy  dog  number  one." 
And  so  on.  This  was  the  lighter  side  of  the  system  of  un- . 
friendly  competition  which  Andrew  Carnegie  originated  and  fos- 
tered. Some  of  these  managers  and  partners  did  not  speak  to  • 
each  other  for  years,  so  skilfully  were  their  jealousies  and  rival- 
ries played  upon ;  and  there  was  hardly  a  man  at  the  head  of 
8 


INSIDE   FINANCIAL    HISTORY 


any  department  of  the  Carnegie  concerns  whose  flanks  were  not 
•  ripped  open,  in  the  fierce  race  for  supremacy.  Some,  like  Cole- 
man,  Shinn,  Scott,  Griffin,  Kennedy,  Abbot,  and  Walker,  re- 
volted and  flung  back  the  taunts  with  interest.  Others  let  their 
anger  be  transmuted  into  fresh  energy  and  a  determination  to 
win.  These  are  the  ones  who  remained  and  became  "  young 
geniuses. " 

"  You  cannot  imagine  the  abounding  sense  of  freedom  and 
relief  I  experience  as  soon  as  I  get  on  board  a  steamer  and  sail 
past  Sandy  Hook,"  once  said  Andrew  Carnegie  to  Captain 


"  Carnegie  did  not  roost  in  the  tree.  .  .  .  He  would 
sit  afar  off,  on  the  rail-fence,  apparently  idly  watching- 
the  spaders  and  waterers  and  trimmers  and  caterpillar- 
killers,  all  desperately  at  work,  with  the  sweat  stream- 
ing. Presently  he  would  descend  from  his  rail-perch, 
catch  up  a  great  club  and  lay  frantically  about  him. 
Bruised  skulls  here ;  broken  skulls  there ;  corpses 
yonder ;  fellows  with  raw  heads  and  aching-  bones, 
crawling  rapidly  into  the  cover  of  the  tall  grass  ;  im- 
precations filling  the  air.  A  scene  of  peaceful  industry 
transformed  into  a  shambles.  Grinning-  grimly  at  his 
club,  Carnegie  would  stroll  back  to  his  rail-perch, 
usually  Skibo."—  "The  Men  who  Made  the  Steel  Trust"  by 
David  Graham  Phillips. 


Jones.     "  My  God,  think  of  the  relief  to  us  !  "  exclaimed  Jones 
with  his  usual  bluntness.     The  retort  was  not  all  in  jest. 

In  his  social  campaign  Andrew  Carnegie  did  not  neglect  the 
»  quest  for  political  influence.     The  Government  brooded  lov- 
,  ingly  over  the  industries  which  paid  their  owners  fifty  to  a  hun- 
dred per  cent,  per  annum ;  and  there  is  a  law  of  political  equiva- 
lents which  Mr.  Carnegie  never  ignored.     The  leaders  of  both 
parties  became  his  intimate  friends ;  and  liberal  subscriptions  to 
r  their  respective  campaign  funds  justified  his  reliance  on  their 
favor.     "How  would  you  like  to  invest  $10,000  in  the  sena- 
torial fight  in ?  "  wrote  James  G.  Elaine  in  1886.     As  the 


"A    BAND    OF  DEVOTED  FRIENDS"          115 

Keystone  Bridge  Company  had  an  uncollectable  account  of 
some  $200,000  against  one  of  the  junior  American  republics 
for  a  steel  building  at  the  New  Orleans  Exposition,  Mr.  Carne- 
gie was  glad  to  make  the  investment ;  and  the  friendly  offices  of 
the  State  Department  secured  an  early  settlement  of  the  claim. 
No  one  had  more  faith  than  Carnegie  in  the  helpful  effect  of  a 
congratulatory  telegram  to  a  president-elect  or  a  new  senator; 
nor  did  ever  a  Scotchman  better  gauge  the  trade  possibilities 
of  a  dinner  at  which  Western  congressmen  might  meet  the 
great  ones  of  earth  in  literature  and  philosophy.  Never  was 


"  My  partners  are  not  only  partners,  but  a  band  of 
devoted  friends,  who  never  have  a  difference.  I  have 
never  had  to  exercise  my  power,  and  of  this  I  am  very 
proud." 

"  I  never  enjoyed  anything  more  than  to  get  a  sound 
thrashing  in  an  argument  at  the  hands  of  these  young 
geniuses." 

' '  When  I  could  not  bring  my  associates  in  business 
to  my  views  by  reason  I  have  never  wished  to  do  so 
by  force.  As  for  instructing  or  compelling  them  under 
the  law  to  do  one  thing  or  another,  that  is  simply  ab- 
surd. I  could  not  if  I  would,  and  I  would  not  if  I 
could." — Andrew  Carnegie. 


band  wagon  driven  with  such  skill.  The  box  of  Carnegie's 
chariot  became  the  "seats  of  the  mighty."  Herbert  Spencer's 
acquaintance  was  made  on  board  a  transatlantic  liner,  as  was 
that  of  sundry  British  peers ;  and  the  visits  of  these  personages  v 
to  the  Pittsburg  works  were  reported  in  a  thousand  newspa- 
pers from  Maine  to  California  and  from  Land's  End  to  John 
O'Groats. 

And  so  a  politico-social  campaign  went  on  hand  in  hand 
with  the  rail,  bridge,  armor-plate,  and  structural-steel  business, 
through  seasons  of  opera,  concerts,  lecturings,  and  book-publish- 
ings,  until  the  name  Carnegie  was  written  in  bright  letters 


n6 


INSIDE  FINANCIAL    HISTORY 


across  the  sky  of  two  hemispheres,  and  people  forgot  that  there 
were  any  other  steel  works  in  the  world. 

Meanwhile  in  Pittsburg  the  partners  worked  steadily  on, 
building  dollar  by  dollar  the  great  golden  pyramid  by  which 
their  majority  stockholder  was  to  be  immortalized. 


Steel  works  by  night. 


Copyright  by  S.  S.  McClure  Co. 


CHAPTER    VIII 

QUARRELS   AND   EJECTURES 

DESPITE  this  great  and  uninterrupted  good 
fortune,  the  internal  diScord  in  which  all 
the   Carnegie  enterprises   were  born  and 
brought  up  continued  without  abatement, 
and  wrought  many  changes  in  the  person- 
nel   of    the    organization.      Ranking  with 
other  evolutionary  factors  in   the  development  of  the  business, 
and  more  influential  than  any  in  stamping  it  with  the  Carnegie 
personality,  these  disagreements  are  deserving  of  a  more  than 
passing  reference. 

At  the  organization  of  the  steel  company,  Andrew  Carne- 
gie's interest  was  one-third  of  the  whole;  but  it  appears  Jrom 
a  printed  statement  of  Mr.  Shinn  that  he  early  developed  "  a 
sentimental  desire  to  have  an  even  half."  This  he  got,  and 
more,  as  one  by  one  the  founders  of  the  organization  dropped 
away  from  it. 

The  first  to  go  was  Mr.  Coleman ;  and  his  interest  was 
bought  by  Mr.  Carnegie  "after  a  bitter  quarrel  between  them," 
to  quote  from  a  letter  addressed  to  the  author  by  one  of  the  old 
members  of  the  corporation.  Before  its  purchase,  however, 
Andrew  Carnegie  repeatedly  speaks  of  this  Coleman  interest  as 
a  desirable  acquisition.  In  the  letter  of  April  I3th,  1876,  now 
before  me,  immediately  following  the  exclamation  quoted, 
"  Where  is  there  such  a  business !  "  he  goes  on  to  say : 

"  I  want  to  buy  Mr.  Coleman  out  &  hope  to  do  so.  — Kloman 
will  have  to  give  up  his  interest.  These  divided  between  Tom, 
Harry  You  and  I  would  make  the  Concern  a  close  Corporation 
Mr.  Scott9  loan  is  no  doubt  in  some  Bankers  hands  &  may  also 

117 


us  QUARRELS  AND  EJECTURES 

be  dealt  with  after  a  little  then  we  are  right  &  have  only 

to  watch  the  Bond  conversions." 


Photographic  reproduction  of  a  letter  written  by  Andrew  Carnegie  on  April  i3th, 
1876,  in  which  he  outlines  plans  for  the  purchase  of  partners'  interests. 

In  a  letter  written  a  little  earlier  he  mentions  the  easy  terms 
on  which  he  hoped  to  acquire  the  Coleman  interest : 

"Yesterday  in  talking  with  Mr  Coleman  ...  I  said  I 
would  be  willing  to  take  his  100.000$  stock  5  years  at  Par  6% 
int  pr  ann  payable  semi  annually  principal  payable  after  5 
years  in  i  2  &  3  years  say—  He  wanted  much  better  bargain 
but  I  would  do  no  better  finally  he  said  to  write  Tom  what  I 
offered  &  he  would  talk  over  it  I  suppose  it  will  be  arranged." 

And  so  it  was.  At  the  same  time  disagreements  arose 
among  the  other  members  of  the  firm,  growing  out  of  the  price 


A    SCHEME    OF  ELIMINATION  119 

to  be  paid  the  Lucy  Furnace  Company  for  pig-iron ;  and  Messrs. 
T.  M.  Carnegie  and  Phipps  sold  half  of  their  stock  in  the  Edgar 
Thomson  to  Andrew  Carnegie,  refusing  to  engage  in  the  erec- 
tion of  a  second  Lucy  stack  unless  he  bought  it.  The  dispute 
concerning  pig-iron  was  finally  settled  by  a  sliding  scale  follow- 
ing the  prices  of  rails;  but  before  long  fresh  troubles  arose 
through  the  inferior  quality  of  the  Lucy  product.  On  April 
27th,  1877,  Mr.  Shinn,  general  manager,  in  a  letter  marked 
"  private  and  confidential,"  wrote  to  Andrew  Carnegie  as  follows  : 

"  Another  matter  comes  up  in  this  connection  for  most  seri- 
ous consideration.  It  is  this.  If  the  L.  F.  Co.  is  to  furnish 
us  the  most,  or  all  of,  our  metal,  it  is  of  the  utmost  consequence 
that  we  should  have  the  fullest  confidence  in  each  other,  and 
that  we  could  feel  assured  at  all  times,  that  no  material  would 
be  used  to  cheapen  the  metal,  that  would  or  could  injure  our 
product.  That  the  cinder  used  last  year  did  this  I  am  very  well 
satisfied ;  and  when  Mr.  Phipps  assured  me  in  January  last  that 
no  cinder  was  being  used,  and  that  no  change  would  be  made 
without  consulting  or  advising  us,  I  felt  easy ;  but  we  have  had 
some  ' split  ends'  among  our  Lake  Shore  rails  and  now  comes 
the  (to  me)  painful  rumor  that  cinder  is  being  used.  You  are 
most  interested  in  our  getting  and  keeping  a  reputation  for 
making  the  best  rails  in  America,  and  to  do  that  we  must  use 
the  best  material.  My  reputation,  as  well  as  my  capital,  is  in- 
volved in  the  matter,  and  if  I  am  to  make  it  my  life  occupation, 
and  cut  loose  from  all  RR.  associations,  it  can  only  be,  as  you 
can  readily  see,  upon  a  basis  of  full  confidence  between  us,  and 
between  us  all  as  associates,  in  all  our  relations." 

The  difficulties  thus  arising,  joined  no  doubt  to  the  ever- 
increasing  output  of  the  steel  works,  developed  in  the  partners 
of  the  Edgar  Thomson  Company  not  interested  in  the  Lucy 
furnaces  a  determination  to  make  their  own  pig-iron.  And 
thus  it  came  about  that  the  Edgar  Thomson  people  erected 
their  own  blast-furnaces  and  inaugurated  a  new  era  in  iron- 
making.  But  the  cabal  resulting  from  these  disagreements 
precipitated  the  "ejecture"  of  those  who  were  most  strenuous 
in  their  opposition  to  the  Lucy  Company  having  any  undue  ad- 
vantage through  their  connections  with  the  Edgar  Thomson. 


120  QUARRELS  AND   EJECTURES 

The  next  one  to  go  out  was  Andrew  Kloman,  under  circum- 
stances already  related.  He  had  an  interest  of  $50,000  in  the 
Edgar  Thomson,  which  Andrew  Carnegie  acquired. 

Then  came  the  little  fellows  who  held  the  convertible  bonds 
and  wanted  stock  for  them.  To  these  Andrew  Carnegie  was 
frank  enough  to  say  that  they  were  not  wanted  and  that  their 
most  profitable  course  would  be  to  quietly  take  back  their  money 
and  get  out.  The  privilege  of  conversion  was  highly  valued 
when  these  bonds  were  sold,  because  it  gave  their  holders  a 
speculative  chance  of  becoming  permanently  interested  in  the 
concern  if  it  proved  successful,  and  if  not  they  still  held  a  lien 
on  a  property  that  had  cost  three  times  the  sum  of  their  mort- 
gage. But  the  privilege  was  disputed;  and  in  most  cases  the 
bondholders  chose  to  accept  their  money  rather  than  go  into 
litigation  with  the  now  powerful  corporation.  Young  Gardiner 
M.  McCandless,  however,  insisted  on  his  rights.  He  was  reluc- 
tantly admitted  to  the  firm,  and  became  Carnegie's  secretary. 

Colonel  Scott  and  Andrew  Carnegie  had  a  timely  quarrel, 
and  the  former  took  back  his  money,  declaring  that  nothing 
would  induce  him  to  become  permanently  interested  in  the 
Edgar  Thomson.  As  for  Mr.  J.  Edgar  Thomson,  he  died  be- 
fore the  bonds  matured,  and  his  executors  also  waived  their 
rights  and  accepted  cash  in  discharge  of  the  obligation. 

The  other  partners  included  in  the  scheme  of  elimination 
were  under  a  surveillance  which  they  little  suspected.  Some 
of  them  had  engaged  in  a  disastrous  stock  speculation,  which 
Andrew  Carnegie,  referring  to  Mr.  McCandless'  share  in  it, 
characterized  in  one  of  his  letters  as  "  miserable  conduct,"  and 
hinted  at  certain  changes  he  had  long  had  in  mind.  But  before 
this  he  wrote  to  Mr.  Shinn  (May  ist,  1877) : 

"There  are  possible  Combinations  in  the  future 

It  is  n't  likely  McCandless   Scott  &   Stewart  will    remain 

with  us.      I  scarcely  think  they  can — I  know  Harry  &  Tom 

have  agreed  with  me  that  you  out  of  the  entire  lot  would  be 

wanted  as  a  future  partner  &  I  think  W3  will  one  day  make  it  a 


DEATH  OF  McCANDLESS 


121 


partnership  Lucy  F  Co  U  Mills,  E  T  &c  &  go  it  on  that  basis 
the  largest  and  strongest  Concern  in  the  Country." 

Mr.  McCandless,  however,  was  eliminated  by  the  kindly 
hand  of  death;  and  Andrew  Carnegie's  grief  was  intense  and 
profound.  Writing  from  Bombay  on  February  22d,  1879,  where 
he  heard  the  sad  news,  he  says : 

"  It  does  seem  too  hard  to  bear,  but  we  must  bite  the  lip  & 
go  forward  I  suppose  assuming  indifference — but  I  am  sure  none 


DAVID  McCANDLESS, 
First  Chairman  of  the  Edgar  Thomson  Steel  Company. 

of  us  can  ever  efface  from  our  memories  the  image  of  our  dear, 
generous,  gentle  &  unselfish  friend—  To  the  day  I  die  I  know 
I  shall  never  be  able  to  think  of  him  without  a  stinging  pain  at 
the  heart —  His  death  robs  my  life  of  one  of  its  chief  pleasures, 
but  it  must  be  borne,  only  let  us  take  from  his  loss  one  lesson 
as  the  best  tribute  to  his  memory,  let  us  try  to  be  as  kind  and 


122  QUARRELS  AND   EJECTURES 

devoted  to  each  other  as  he  was  to  us.  He  was  a  model  for  all 
of  us  to  follow  One  thing  more  we  can  do — attend  to  his 
affairs  &  get  them  right  that  Mrs.  McCandless  &  Helen  may  be 
provided  for — I  know  you  will  all  be  looking  after  this  &  you 
know  how  anxious  I  shall  be  to  cooperate  with  you." 

The  partners  accordingly  carried  Mr.  McCandless'  interest 
undisturbed  until  Mr.  Carnegie's  return  the  following  summer. 
The  great  profits  made  during  this  period  have  been  adverted  to, 
as  well  as  Carnegie's  joy  on  Mount  Etna  or  some  such  elevation. 
Despite  this,  he  insisted  on  the  purchase  of  Mr.  McCandless' 
interest  at  the  book  value  shown  by  the  appraisement  made  be- 
fore Mr.  McCandless'  death.  The  member  of  the  old  corpora- 
tion previously  quoted  writes  me : 

"  But  this  decision  was  not  made  until  late  in  July  follow- 
ing, after  Mr.  Andrew  Carnegie's  return  from  his  trip  around 
the  world,  when  large  profits  had  been  made  and  still  larger 
were  shown  by  the  orders  entered  on  the  books  for  delivery  dur- 
ing the  following  nine  months.  .  .  .  Legally  the  company  acted 
fairly." 

No  share  of  these  profits  was  included  in  the  price  paid  to 
Mrs.  McCandless,  and  she  only  received  some  $90,000  for  her 
husband's  interest.  It  had  cost  $65,000  in  cash. 

Mr.  Shinn  was  the  next  to  go  out  of  the  concern ;  and  the 
story  of  his  leave-taking  found  its  way  into  the  courts.  When 
Mr.  McCandless  died,  Mr.  Shinn  expected  to  be  made  chairman 
in  his  place.  He  was  the  largest  stockholder  after  the  elder 
Carnegie ;  and  as  he  had  done  much  to  make  the  business  a  suc- 
cess, he  felt  that  his  services  and  interest  entitled  him  to  the 
most  honorable  position  in  the  company.  But  Carnegie,  who 
controlled  the  board,  had  left  orders  before  leaving  on  his  trip, 
that  in  the  event  of  a  vacancy  in  the  chair  his  brother  was  to 
be  elected  to  fill  it.  This  was  accordingly  done,  Shinn  protest- 
ing by  letter  to  Carnegie  in  Egypt,  and  plainly  setting  forth  his 
claims  and  disappointment.  Carnegie  replied,  urging  Shinn  to 
"  let  the  matter  rest  until  my  return,  &  we  will  meet  as  friends 


THE  FIGHT  WITH   SHINN 


123 


desirous  of  pleasing  each  other,  &  I  am  sure  our  happy  family 
will  remain  one.  " 

Shinn's  claim  was  a  reasonable  one,  judged  in  the  light  of 
the  letters  he  had  received  from  Carnegie. 

"  Remember  I  can  see  no  fault  with  your  management  as  it 
is,"  Carnegie  wrote  him  in  August,  1876. 

"  On  the  contrary  I  assure  you  there  are  few  nights  in  which 
before  sleeping  I  dont  congratulate  myself  at  our  good  fortune 
in  having  you  there  —  Tom  and  Harry  ditto  —  but  we.  dont  think 
we  can  have  too  much  of  'so  good  a  thing  '  &  want  somehow  or 
other  to  get  you  root  &  branch." 


A)e  *  ,~    j?vL+.  ,£)^ 


c*  &it> 


J     <2     c/     A*-~T~st3 


Photographic  reproduction  of  part  of  a  letter  from  Andrew  Carnegie  to  William  P. 

Shinn. 

Again  : 

"  I  like  the  tone  of  your  personal  letter.     Much—      Have  al- 
ways known  you  would  find  it  necessary  —  if  E.  T.  proved  what 


124  QUARRELS  AND   EJECTURES 

we  expected — to  give  it  all  your  time  and  thought—  It  is  a 
Grand  Concern  &  sure  to  make  us  all  a  fortune.—  With  you  at 
the  helm,  &  my  pulling  an  oar  outside,  we  are  bound  to  put  it 
at  the  head  of  rail  making  concerns— 

My  preference  would  be  for  you  to  double  your  interest  & 
manage  it  to  the  exclusion  of  everything  else — we  to  carry  the 
second  50.000$  until  you  could  pay  it  &  allow  you  to  draw  on  a/c 
profits  any  sum  required  for  expenses,  but  this  shall  be  as  you 
prefer. — We  shall  not  quarrel  about  Your  Compensation  "• 

Accordingly  Shinn  had  resigned  his  position  on  the  rail- 
roads, had  bought  a  part  of  the  Coleman  interest,  and  was  now 
giving  his  whole  time  to  the  management  of  the  Edgar  Thom- 
son works. 

On  the  elder  Carnegie's  return,  however,  the  chairmanship 
was  permanently  vested  in  his  brother  Tom. 

Meanwhile  other  matters  of  dispute  had  arisen  between 
Shinn  and  his  colleagues  which  had  become  the  subject  of  out- 
side gossip  and  comment ;  so  that  the  slight  was  doubly  felt  by 
him,  and  he  sent  in  his  resignation.  In  his  letter  of  withdrawal 
from  the  management  of  the  company,  dated  September  i3th, 
1 879,  he  says : 

"  I  have  full  confidence  in  the  pecuniary  success  of  the  E.  T. 
S.  Co.  Limited  and  purpose  to  remain  your  business  associate; 
and  it  will  be  my  desire,  as  it  will  be  my  interest,  to  advance 
its  success  by  any  and  all  means  in  my  power. " 

This,  however,  did  not  accord  with  Carnegie's  plans,  nor 
with  the  policy,  now  first  inaugurated,  that  no  officer  of  the 
company  should  retain  his  interest  after  he  had  resigned  his 
office ;  and  a  committee  was  appointed  by  the  Board  of  Managers 
to  confer  with  Mr.  Shinn  about  the  purchase  of  his  interest. 
This  committee  consisted  of  John  Scott  and  Andrew  Carnegie. 
The  former  has  reduced  his  statement  of  the  transaction  to 
writing.  It  is  as  follows  : 


*In  this  and  other  Carnegie    letters    the  spelling  and  punctuation  of    the 
originals  are  preserved. 


Plate  VI, 


WILLIAM  P.  SHINN 

FIRST    MANAGER    OF    THE    EDGAR    THOMSON   STEEL   WORKS 


"MALICIOUS  MENDACITY"  125 

•'In  the  month  of  September  1879,  the  latter  part  of  the 
month,  the  E.  T.  Board  met  and  accepted  the  resignation  of  Mr. 
Shinn.  At  the  meeting  the  board  appointed  Mr.  Carnegie  and 
myself  to  confer  with  Mr.  Shinn  about  the  purchase  of  his  in- 
terest- in  the  Company.  After  the  board  adjourned  Messrs. 
Carnegie,  Shinn  and  myself  remained,  the  others  having  retired. 
Mr.  Shinn  then  proposed  to  sell  his  whole  interest  for  a  certain 
sum,  the  amount  I  have  forgotten.  Mr.  Carnegie  refused  to 
recognize  that  the  stock  in  dispute  had  any  value  to  him.  Mr. 
Carnegie  offered  Mr.  Shinn  on  behalf  of  the  E.  T.  Co.  one  hun- 
dred and  five  thousand  dollars  for  his  interest  standing  in  his 
name  on  the  books  of  the  Company,  which  offer  Mr.  Shinn  de- 
clined. Some  time  during  the  interview  Mr.  Carnegie  made  the 
remark  that  he  would  rather  have  given  one  hundred  thousand 
dollars  than  have  Mr.  Shinn  leave. 

The  next  day  when  the  board  were  about  ready  to  meet, 
knowing  Mr.  Shinn  was  at  the  office  of  F.  Wayne  Co.  I  went 
up  to  see  Mr.  Shinn  and  urged  him  to  accept  the  offer  of  $105,- 
ooo  which  had  been  made  him  the  day  previous  by  Mr.  Carne- 
gie. At  my  earnest  solicitation  Mr.  Shinn  finally  gave  his  con- 
sent to  accept  the  offer.  Mr.  Shinn  shortly  after  came  down  to 
the  Edgar  Thomson  office  and  asked  Mr.  Carnegie  and  myself 
to  come  out  into  the  hall.  Mr.  Shinn  then  stated  to  Mr.  Car- 
negie and  myself,  that  he  was  willing  to  accept  the  offer  of 
$105,000  whenever  they  could  agree  on  a  satisfactory  agreement 
to  refer  the  question  of  the  stock  in  dispute  to  arbitrate.  This 
being  reported  to  the  board,  they  authorized  the  officers  to  close 
the  purchase.  The  board  did  not  make  the  condition  for  the 
agreement  to  arbitrate,  that  having  been  done  by  Mr.  Shinn." 

The  agreement  to  arbitrate  here  referred  to  concerned  the 
right  and  title  of  Mr.  Shinn  to  the  stock  which  Andrew  Carne- 
gie had  sold  him  out  of  that  which  he  had  bought  from  Messrs. 
Coleman,  Phipps,  and  T.  M.  Carnegie.  It  was  a  full  share  of 
$50,000.  Mr.  Carnegie  denied  Shinn's  right  to  this  stock  and 
the  premium  to  which  it  had  advanced,  on  the  ground  that  part 
of  the  consideration  Shinn  had  agreed  to  pay  for  it  was  that  he 
would  remain  general  manager  of  the  works  as  long  as  Mr.  Car- 
negie wanted  him.  Shinn  indignantly  repudiated  such  an  un- 
derstanding, which  he  characterized  as  "  slavery;  "  and  the  mat- 
ter was  submitted  by  agreement  to  the  arbitrament  of  Messrs. 


126  QUARRELS  AND  EJECTURES 

B.  F.  Jones,  John  W.  Chalfant,  and  William  Thaw,  prominent 
business  men  of  Pittsburg. 

The  documents  in  the  case  assumed  voluminous  proportions, 
as  the  disputants  brought  charge  and  countercharge  against  each 
other ;  and  some  of  them  became  almost  virulent  in  character. 
Andrew  Carnegie  injected  into  his  statement  of  the  case  charges 
against  Shinn  and  his  friends  amounting  to  conspiracy  to  de- 
fraud ;  but  unfortunately  he  entered  into  irrelevant  details  and 
tripped  up  on  his  facts.  The  most  singular  of  the  lapses  of 
memory  by  which  his  case  was  injured  was  contained  in  the 
following  statement  to  the  arbitrators  : 

"  When  in  India  I  was  rendered  anxious  by  receiving  a  tele- 
gram from  him  [Shinn]  asking  me  to  get  an  important  letter  at 
Aden,  and  reply  by  telegraph.  You  can  imagine  what  thoughts 
arose.  The  most  probable  emergency  that  suggested  itself  to 
my  mind  was  that  some  important  financial  question  had  arisen, 
and  that  it  was  necessary  parties  should  receive  my  personal 
guarantee  in  some  way,  and  at  once.  It  was  several  weeks  be- 
fore I  could  obtain  the  expected  letter,  and  judge  my  surprise, 
nay  rather  indignation,  when  the  document  proved  to  be  five 
closely  written  pages  in  Mr.  Shinn's  own  handwriting,  setting 
forth  his  personal  disappointment  and  dissatisfaction  at  the 
board  of  managers  not  having  seen  fit  to  promote  him  to  the 
chairmanship,  in  place  of  our  late  lamented  friend  Mr.  McCand- 
less,  I  was  requested  to  telegraph  a  reply,  instructing  the  board 
to  undo  its  action.  Instead  of  this,  I  wrote  an  indignant  answer, 
but  as  there  were  many  days  before  the  mail  left,  I  had  time  to 
reflect,  and  finally  destroyed  the  letter,  and  sent  instead  a  short 
note  asking  him  to  await  my  return." 

Shinn's  answer,  for  a  few  pages,  was  a  clever  piece  of  judi- 
cial reasoning;  but  having  been  accused  in  no  equivocal  terms 
of  dishonorable  and  contemptible  practices,  he  later  allowed 
himself  the  free  use  of  his  somewhat  caustic  pen,  and  marred 
his  otherwise  able  presentation  of  the  case  by  charging  his 
opponent  with  "  wilful  and  malicious  mendacity. " 

"In  regard  to  his  [A.  C.'s]  statements,"  he  says,  "it  may 
well  be  said  as  has  been  said  of  a  much  more  prominent  person, 


SHINN  "ON    TRIAL"  127 

'Where  most  people  remember,  his  lordship  fancies,  and  in  his 
case  what  is  most  convenient  naturally  offers  itself.  This  has 
very  much  increased  his  brilliancy,  for  the  process  leaves  its 
practicer  utterly  unhampered.  But  nobody  should  ask  for  both 
strict  accuracy  and  Lord  B.'s  quick  free  wit.  It  is  demanding 
an  unreasonable  combination.'  So  much  on  the  'go-as-you- 
please  '  style  is  Mr.  Carnegie's  historical  account  of  our  transac- 
tions, that  the  above  quotation  is  unavoidably  suggested.  .  .  . 

Mr.  Carnegie  refers  to  a  telegram  which  he  received  in 
India,  asking  him  to  get  an  important  letter  at  Aden,  and  reply 
by  telegraph,  and  tells  you  of  his  emotions  when  he  re- 
ceived it. 

I  sent  no  such  telegram  to  Mr.  Carnegie  while  he  was  in 
India,  nor  indeed  was  any  such  telegram  sent  him  at  any  time. 
The  letter  he  refers  to  was  written  to  him  Feb.  22nd,  1879,  ad- 
dressed to  him  at  Aden,  which  was  the  address  he  gave  for  let- 
ters to  be  sent  at  that  date.  The  author  of  'Around  the  World  ' 
says:  'Bombay,  Monday,  Feb.  24th,  We  sailed  at  six  in  the 
evening  by  the  splendid  P.  and  O.  steamer,  Pckin/  that  being 
the  date  he  left  India.  On  March  I2th  we  received  a  telegram 
from  him  dated  Cairo,  Egypt,  and  on  that  date  I  telegraphed  him 
as  follows : — 

Carnegie,  Cairo.  Bison,  Cling,  Black,  Cloak,  Angel,  Feb. 
22nd,  Aden,  Bacon,  telegraph  and  mail.  Shinn. 

The  first  four  words  related  to  our  profits  in  Jan.  and  Feb., 
the  balance  is  translated  thus  :  Angel.  Have  you  received  our 
letter  of  Feb.  22nd,  Aden  ?  Bacon.  Where  shall  we  address 
you,  telegraph  and  mail  ? 

Not  one  word,  as  you  will  see,  about  answering  by  tele- 
graph, or  about  letter  being  important,  and  sent  sixteen  days 
after  he  left  India. 

But  you  would  expect  a  matter  which  caused  him  so  much 
anxiety  as  he  alleges  to  be  mentioned  in  his  letters,  and  what 
does  he  say? 

In  his  letter  dated  Bombay,  Feb.  22nd,  he  does  not  mention 
it,  for  the  good  reason  that  he  knew  nothing  of  it.  In  his  letter 
dated  Sorrento,  March  23rd,  the  first  received  after  he  got  the 
telegram,  he  writes, 

'I  expected  your  Aden  letter  to-day,  but  next  mail  will 
undoubtedly  bring  it,  reaching  me  at  Naples,  Wednesday  even- 
ing on  our  arrival.' 

In  his  next,  dated  Rome,  March  29th,  he  says  :— 

'Yours  from  Aden  not  yet  received  although  I  ordered  it 
here.  May  come  Tuesday,  when  I  will  telegraph/ 


123  QUARRELS  AND   EJECTURES 

You  find  no  trace  of  anxiety  or  other  deep  emotion  in  these 
letters.  .  .  . 

To  complete  the  record  I  inclose  my  pressed  copy  of  the 
Aden  letter  which  instead  of  'five  closely  written  pages/  con- 
sists of  two  closely  written  and  one-half  page,  not  very  close. 
In  it  you  will  look  in  vain  for  any  request  to  telegraph  a  reply. 
In  fact  the  whole  of  these  emotions  over  the  Aden  letter  seem 
to  be  a  case  of  'reflex  action  '  excited  by  the  claim  in  contro- 
versy. 

You  will  note  in  his  reply  to  the  Aden  letter  that  he  says : 
*  Let  the  matter  rest  until  my  return  and  we  will  meet  as  friends 
desirous  of  pleasing  each  other,  and  I  am  sure  our  happy 
family  will  remain  one.'  This  was  his  'indignation'  referred 
to. 

He  has  told  you  how  we  'met  as  friends  '  in  the  first  con- 
versation we  had  on  the  subject,  when  he  says :  'And  upon  my 
return  and  before  any  question  of  this  claim  arose,  I  told  him  I 
had  twice  already  bought  his  life  work,'  etc. ;  he  also  insulted 
me  still  further  by  telling  me,  in  reference  to  the  increase  of 
salary  voted  me  unanimously  by  the  Board,  'You  might  as  well 
have  put  your  hand  in  my  pocket  and  taken  out  $750 '  (his  half 
of  it). 

On  the  same  day  he  told  another  person  who  subsequently 
informed  me  that  he  'hoped  most  sincerely  he  (I)  would  resign 
his  (my)  connection  with  the  E.  T.  Steel  Co.,  Limited,  as  he 
was  determined  to  get  rid  of  him  '  (me),  and  later  on,  in  the  same 
conversation,  he  said  I  had  better  resign  now,  as  he  would  make 
it  so  warm  for  me  that  he  would  have  my  resignation  before 
Christmas.  (Sworn  evidence  of  this  statement  can  be  had  if 
desired  by  the  arbitrators.) 

Without  further  conversation  with,  or  notice  to  me,  at  a 
meeting  of  the  Board  of  Managers  held  late  in  July,  at  which  he 
had  no  official  standing  or  right  (not  being  a  member),  he  in- 
sultingly demanded  my  resignation  as  Treasurer,  under  the  false 
pretence  that  I  had  myself  suggested  it  in  my  Aden  letter, 
which  pretence  he  repeats  in  his  statement  to  you.  .  .  . 

He  thus  took  from  me,  as  by  violence,  the  responsible  and 
honorable  office  of  Treasurer,  which  I  had  held  since  the  forma- 
tion of  the  company  and  now  comes  before  you  asking  'equity,* 
alleging  that  I  left  the  company  without  his  consent. 

I  myself  saw  a  letter  in  his  handwriting,  in  which  he  said, 
referring  to  me  byname: — 'Thank  God  his  name  is  off  our 
paper,'  and  'Mr.  Shinn  is  on  trial,'  etc. 

Under  these  circumstances  you  will  not  wonder  that  I  left 


CHARGES   OF  CONSPIRACY  129 

Mr.  Carnegie's  company,  and  I  do  not  therefore  feel  called  upon 
to  reply  to  his  history  of  my  departure." 

To  all  this  Carnegie  retorted  in  kind,  becoming  if  possible 
more  offensive  than  before  in  his  charges  of  conspiracy. 

"  In  a  very  short  time,"  he  says,  "  the  Edgar  Thomson 
Company  would  have  been  fleeced  upon  most  of  its  supplies. 
With  the  railway  manager  bribed  and  the  purchaser  of  our 
supplies  interested,  the  combination  seemed  complete,  and  does 
credit  to  the  genius  of  our  late  general  manager." 

This  ended  for  the  time  being  the  effort  at  a  "peaceful  " 
settlement,  for  Shinn  angrily  revoked  his  agreement  to  arbitrate 
and  withdrew  all  the  papers.  On  the  same  day  he  tendered 
the  purchase-money  of  the  stock  in  dispute,  and  brought  suit  in 
the  Allegheny  County  Court.  Carnegie  then  petitioned  for 
removal  of  the  case  to  the  United  States  Circuit  Court,  which 
was  granted ;  and  Shinn  in  his  turn  secured  an  order  of  court 
for  the  production  of  the  Edgar  Thomson  books.  For  obvious 
reasons  this  was  a  measure  distasteful  in  the  highest  degree  to 
the  Carnegies;  and  when  the  case  was  called  for  trial  on  June 
1 6th,  1 88 1,  an  adjournment  was  asked  for  an  hour.  The  law- 
yers then  got  together  in  an  adjoining  room  and  patched  up 
another  agreement  to  arbitrate.  The  case  was  thereupon  sub- 
mitted to  the  same  arbitrators  as  before  on  the  old  pleadings, 
subject,  however,  to  a  re-statement  of  Shinn 's  claim  on  the 
question  of  value,  and  leaving  that  question  wholly  to  the  arbi- 
trators free  from  the  restrictions  of  the  original  submission, 
which  limited  the  premium  to  fifty  per  cent.  This  was  an  im- 
portant gain  for  Shinn,  since  it  left  to  arbitration  the  question 
of  Shinn 's  right  to  participate  in  the  enormous  increase  in  value 
which  the  stock  had  undergone  during  the  previous  two  years. 

The  exact  terms  of  the  award  were  long  kept  secret ;  but  it  is 
betraying  no  confidence  to  state  now  that  Shinn  won  on  the 
main  issue  and  received  his  full  claim  with  a  substantial  pre- 
mium representing  the  increased  value  of  his  stock.  It  was  just 
under  $200,000.  But  he  lost  his  contention  that  he  could  re- 
9 


130  QUARRELS  AND   EJECTURES 

main  a  member  of  the  corporation  after  he  had  accepted  service 
with  a  competing  concern. 

The  pleadings  and  answers  in  the  civil  suit  were  withdrawn 
from  the  court  files,  so  that  to-day  there  is  nothing  in  the 
official  archives  but  the  most  meagre  record  of  the  case. 

The  next  "  ejecture  "  was  that  of  John  Scott,  in  1 882.  Like 
so  many  others  before  and  since,  it  was  the  outgrowth  of  per- 
sonal difficulties  with  Andrew  Carnegie.  Mr.  Scott  obtained, 
however,  a  very  high  premium  for  the  $50,000  which  he  had 
originally  invested  in  the  company ;  as  did  also  Gardiner  McCand- 
less,  who  was  induced  to  sell  out  the  same  year.  Mr.  McCand- 
less  received  $183,000  for  his  original  investment  of  something 
like  $42,000  in  the  convertible  bonds. 

Thus  did  events  justify  the  amazing  foresight  displayed  by 
Andrew  Carnegie  when,  only  eight  months  after  the  opening  of 
the  Edgar  Thomson  works,  he  outlined,  in  his  letter  of  April 
1 3th,  1876,  the  principal  changes  in  the  personnel  of  the  organi- 
zation which  have  just  been  described.  It  is  an  astonishing, 
almost  an  uncanny,  exhibition  of  that  clairvoyant  faculty  for 
which  he  has  always  been  noted.  In  one  aspect,  too,  it  illus- 
trates the  practical  working  of  the  Carnegie  motto  :  "  Concen- 
tration !  First  honesty,  then  industry,  then  concentration." 

A  further  change  was  hinted  at  in  Carnegie's  letters  for 
which  the  way  was  thus  being  gradually  prepared.  This  was 
the  combination  of  the  Union  Iron  Mills,  the  Lucy  Furnaces, 
and  the  Edgar  Thomson  Steel  Works. 

The  causes  which  brought  about  this  consolidation  are  not 
very  complex.  On  the  one  hand  was  the  elder  Carnegie's  am- 
bition to  make  the  works,  which  were  now  to  bear  his  name,  as 
impressive  as  possible.  On  the  other  hand,  was  the  wish  of  his 
brother  and  Mr.  Phipps  to  have  a  larger  share  in  such  a  good 
thing  as  the  Edgar  Thomson  Company.  Forty  odd  per  cent,  in 
dividends  is  very  attractive;  and  no  doubt  both  Mr.  Phipps  and 
young  Carnegie  were  by  this  time  thoroughly  sorry  that  they  had 
sacrificed  any  part  of  their  shares  in  the  Edgar  Thomson  Com- 


THE   PIG-IRON  DISPUTE  131 

pany.  Accordingly  a  scheme  of  consolidation  was  made,  and  the 
manner  in  which  it  was  carried  out  is  told,  with  much  interest- 
ing detail,  in  the  following  letters  : 

PITTSBURGH,  PA.,  Mch.  3ist.  1881. 
Wm.  P.  Shinny  Esq.,  Pittsburgh,  Pa. 

DEAR  SIR:  In  1879,  tne  subject  was  broached,  I  do  not  re- 
member by  whom,  to  consolidate  the  Lucy  Furnace  Co.  and  the 
Union  Iron  Mills  with  The  Edgar  Thomson  Steel  Co.  Limited. 

We  had  so  many  disagreements  and  much  trouble  in  fixing 
the  price  of  pig-iron  furnished  by  the  Lucy  Furnace  Co.  that  I 
at  once  concluded  that  it  was  a  good  thing  to  do,  and  expressed 
myself  in  favor  of  the  scheme  provided  it  could  be  carried  out 
on  a  fair  basis.  I  was  governed  entirely  to  vote  on  your  recom- 
mendation that  the  proposition  of  55  for  the  E.  T.  S.  Co.  Limd. 
and  45  for  the  other  property. 

Now  that  I  have  become  familiar  with  the  subject,  and  our 
experience  of  working  the  past  year  under  the  consolidation,  I 
do  not  think  the  property  put  in  should  have  [been]  taken  at 
over  30$. 

Having  had  the  utmost  confidence  in  your  judgment,  in  such 
matters,  I  have  a  curiosity  in  learning  what  governed  you  in 
giving  the  advice  you  did,  and  thought  it  due  you  to  give  you 
an  opportunity  to  explain  how  you  made  such  a  mistake. 

Yours  truly 

JOHN  SCOTT. 

PITTSBURGH,  April  4th.  1881 
John  Scott  Esq.  Pittsburgh,  Pa. 

DR.  SIR:   I  have  your  letter  of  March  3ist,  in  which  you 
refer  to  the  basis  of  consolidation  of  interests  of  the  Edgar 
Thomson   Steel  Co.  Limited  with  the   Lucy  Furnace  Co.,  Car-  ] 
negie  Brothers  &  Co  and  Carnegie  &  Co.  on  the  basis  of  55' 
per  cent  to  the  former  and  45  per  cent  to  the  latter,  and  ask 
how  I  came  to  recommend  what  you  characterize  as   "  such  a 
mistake." 

In  reply,  I  will  state  the  circumstances  under  which  the  pro- 
posed consolidation  was  first  discussed,  and  what  led  me  to  as- 
sent to  the  basis  named. 

In  August  1879  I  was  invited  to  Mr.  T.  M.  Carnegie's  one 
evening,  where  I  found  Messrs.  A.  Carnegie,  T.  M.  Carnegie 
and  H.  Phipps.' 

The  subject  of  the  consolidation  was  broached,  and  they 


132  QUARRELS  AND   EJECTURES 

produced  statements  of  cost  and  earnings  of  their  properties  as 
follows : 

Cost  to  July  ist.  Earnings,  1878.  Six  mos.  1879. 

Union  Iron  Mills $813,000.00  153,000.00  98,000.00 

Lucy  Furnaces 662,000.00  120,000.00  70,000.00 

Coke  Works,  4/5ths 100,000.00  20,000.00  16,000.00 

Total 1,575,000.00  293,000.00  184,000.00 

The  cost  of  E.  T.  works,  exclusive  of  the  amount  expended 
on  furnaces  and  the  earnings  for  the  same  period  had  been  as 
follows : 

Cost  of  E.  T.  works  July  i,  '79 $1,522,159.16 

Profits,  1878 $401,800 

"        6  mo.  1879 252,845 

654,645.00 

The  costs  and  earnings  of  the  two  properties  compared  then 
as  follows : 

Cost.  Earnings  18  mo. 

E.  T.  S.  Works $1,522,000  654,645 

Carnegies'  Works 1,575,000  477,000 

But  the  E.  T.  S.  Co.  had  furnaces  A  and  B  well  under  way,  and 
expected  to  complete  them  by  Jan.  ist,  1880;  and  I  claimed 
there  should  be  added  to  the  cost  and  earnings  of  E.  T.  S.  Co. 
an  amount  equal  to  four-fifths  the  cost  and  earnings  of  Lucy 
Furnaces,  or  to  cost  say  $528,000 
and  to  earnings  200,000 

This  made  them  compare  as  follows : 

Cost.  Earnings  18  mo. 

E.  T.  S.  Works $2,050,000  $854,645 

Carnegies'  Works 1,575,000  477,000 

the  proportions  of  which  were  relatively 

Cost.  Earnings  18  mos. 

E.  T.  S.  Works    of  cost  56^  of  earnings  64  per  cent. 

Carnegies'  Works  "     "    43T57  "         "        36    " 

the  average  of  which  gave 

E.  T.  S.  Works 60 

Carnegies' 40 

and  I  therefore  proposed  to  accept  60  per  cent  for  E.  T.  S. 
works. 

T.  M.  Carnegie  demurred  to  this,  alleging  that  the  E.  T.  S. 
Works  had  been  unusually  profitable  in  past  18  months,  while 


Plate  VII, 


ANDREW  CARNEGIE 

IN     1884 


SERIOUS   CHARGE  133 

the  furnace  property  had  been  very  unusually  depressed,  pig-iron 
having  sold  at  very  low  prices;  and  he  insisted  on  50  per  cent 
for  the  Carnegie  Works. 

A.  Carnegie  then  pointed  out  that  the  E.  T.  S.  Works  had  a 
debt  of  $186,000  on  its  land,  which  would  have  to  be  assumed 
by  the  joint  interest,  which  if  deducted  would  allow  only  $1,864,- 
ooo  as  cost  of  E.  T.  S.  Works,  or  54  per  cent  of  the  whole. 

Upon  these  considerations,  and  for  the  reason  named  by  you, 
viz.  to  destroy  the  unceasing  strife  and  bad  feeling  in  the  fixing 
of  prices  for  metal  bought  of  Lucy  Furnace  Co.  in  which  I  had 
been  annoyed  almost  beyond  endurance,  I  suggested  55  per  cent 
as  a  compromise  which  was  agreed  to. 

It  was  not  mentioned,  nor  was  I  aware,  that  the  land  on 
which  the  Lucy  Furnaces  and  Union  Iron  Mills  were  built  was 
not  owned  by  them;  and  when  Mr.  Carnegie  urged  the  mort- 
gage on  the  E.  T.  S.  property  in  reduction  of  its  value,  he  knew 
that  a  similar  and  much  more  important  incumbrance  was  on  the 
Union  Iron  Mills  property,  which  I  now  understand  was  only 
leased,  at  a  rental  of  $4,855  annually  and  liable  to  be  greatly 
increased  when  present  leases  expire. 

This  is  equal  to  a  mortgage  of $  80,900 

Mortgage  on  Lucy  Furnace  property 160,000 

Making  a  total  incumbrance  of $240,900 

of  which  no  mention  was  made  at  the  time,  of  which  I  had  not 
the  slightest  knowledge  or  suspicion,  and  which  good  faith  re- 
quired should  have  been  set  forth. 

Had  I  known  of  these  incumbrances  I  never  would  have 
agreed  to  consolidating  on  the  basis  of  55  and  45  per  cent,  nor 
would  I  have  agreed  to  it  at  all,  except  to  harmonize  our  inter- 
ests on  the  point  which  had  caused  so  much  difficulty  and  hard 
feeling. 

I  see  that  in  the  new  firm  of  C.  B.  &  Co.  Limd.  they  put  in 
the  respective  properties 

E.  T.  S.  property $2,500,000  62^  per  ct. 

Carnegies'      "          1,500,000  37^    "     " 

4,000,000 

which  is  much  nearer  what  the  real  proportionate  value  was  a 
year  ago.  Yours  truly 

WM.  P.  SHINN 


134  QUARRELS  AND  EJECTURES 

The  following  interesting  data  appeared  in  a  foot-note  to 
Mr.  Shinn's  letter: 

1880 

Profits — E.  T.  S.  Works $1,625,000.00 

Lucy $294,524.97 

Coke 96,295.97 

Union  Mills 55,836.71 

446,657.65 


2,071,657.65 
Chgd.  Impts. 

Lucy  Fur.  Co 131,259.57 

Union  Mills 55,200.62 


186,460.19 
Leaves  actual  profits 260,197.46 

The  new  firm  referred  to  by  Mr.  Shinn  was  Carnegie  Broth- 
ers &  Co.,  Limited,  which  was  organized  on  April  ist,  1881, 
with  a  capital  of  $5,000,000.  Of  this,  $4,000,000  was  repre- 
sented by  the  Union  Iron  Mills,  the  Lucy  Furnaces,  certain 
unimportant  coke  interests  of  Andrew  Carnegie,  and  the  Edgar 
Thomson  works.  The  rest  was  to  be  paid  in  cash.  In  this 
consolidation  the  interests  were  apportioned  as  follows : 

Andrew  Carnegie .$2,737,977.95 

Thos.  M.  Carnegie 878,096.58 

Henry  Phipps 878,096.58 

David  A.  Stewart 175,318.78 

John  Scott 175,318.78 

Gardiner  McCandless 105,191.00 

John  W.  Vandervort 50,000.00 

The  last  named  was  Carnegie's  companion  on  his  trip  around 
the  world.  He  soon  fell  sick  and  withdrew  from  active  business 
to  California,  where  he  died  in  1897. 

The  earning  powers  of  the  several  properties  are  given  in  the 
foot-note  to  Mr.  Shinn's  letter  quoted  above.  Their  estimated 
values  are  given  in  the  articles  of  incorporation  as  follows : 

Mortgage. 

Edgar  Thomson  works $2,385,000  594, °°° 

Coal  mines  and  Coke  ovens  at  Unity 80,000 

Ore  lands  at  Patton 35,ooo 

Lucy  Furnaces 750,000  160,000 

Union  Iron  Mills 630,000 

Four-fifths  interest  in  Larimer  Coke  works 120,000 


$4,000,000 


INCOHERENT  PLANS  135 

The  advantages  of  industrial  consolidation  had  not,  at  this 
date,  received  any  general  recognition ;  and,  as  we  have  seen,  it 
was  other  considerations  than  increased  efficiency  and  economy 
that  prompted  the  first  imperfect  combination  of  the  Carnegie 
properties. 

As  illustrating  how  vague  and  incoherent  were  the  plans  of 
the  group  of  men  controlling  the  property  at  this  time,  it  may 
be  mentioned  that  two  months  after  the  consolidation  described, 
the  Lucy  Furnaces  were  taken  out  of  it  and  turned  over  to  Wil- 
son, Walker  &  Co.  During  these  eight  weeks,  however,  their 
value  was  supposed  to  have  increased  from  $750,000  to  $1,000,- 
ooo ;  and  Messrs.  John  T.  Wilson,  James  R.  Wilson,  and  John 
Walker  each  subscribed  for  $142,857  of  stock  in  the  Lucy 
Furnace  Company,  Limited,  with  its  million-dollar  capital.  An- 
drew Carnegie's  share  in  it  amounted  to  $420,627;  the  rest  of 
the  group  holding  interests  from  $58,539  in  the  cases  of  Thomas 
M.  Carnegie  and  Henry  Phipps,  to  $3,333  in  the  case  of  John 
Vandevort. 


CHAPTER    IX 
A   GLANCE   AT    PROCESSES 

AT    this    point    a  brief  description 
of  the  processes  of  iron  and  steel 
making  is   necessary  in  order  that 
readers  unfamiliar  with 
these   arts    may  intel- 
ligently follow  the 
course    of   this    narra- 
tive.    While  it  is  not 

Blowing  engines  for  blast-furnace.  possible      that      Slich     a 

rough  outline  can  con- 
vey more  than  a  hint  of  the  wonderful  transformations  in- 
volved in  modern  methods  of  iron  and  steel  manufacture,  it  may 
nevertheless  help  the  reader  to  appreciate  the  nature  of  the 
great  industrial  evolution  we  are  tracing. 

There  is  not  a  State  in  the  American  Union  in  which  iron- 
stone is  not  found.  Indeed,  one  may  say  there  is  no  consider- 
able area  of  the  earth's  surface  where  it  does  not  exist.  The 
ancients  undoubtedly  knew  how  to  mine  and  smelt  it ;  but,  un- 
like other  metals  found  in  the  tombs  and  habitations  of  vanished 
races,  iron,  unless  protected  from  air  and  moisture,  rapidly 
perishes  through  oxidation.  In  other  words  it  rusts  away. 
The  oldest  known  piece  of  wrought-iron  of  any  great  size  is 
found  in  the  pillar  of  a  temple  at  Delhi,  India.  It  is  sixteen 
inches  in  diameter  and  weighs  about  seventeen  tons.  No  one 
knows  when  or  how  it  was  made. 

Many  tribes  of  savages  existing  in  our  own  time  have  been 
found  in  possession  of  primitive  means  of  smelting.  Speke  and 

Livingstone  describe  the  miniature  blast-furnaces  of  the  natives 

136 


EARLY  FURNACE   PRACTICE  137 

of  Central  Africa;  and  it  is  not  improbable  that  these  simple 
operations  were  learned  from  the  Egyptians,  whose  routes  of 
trade  are  now  known  to  have  penetrated  into  what  had  become 
in  our  own  time  "  Darkest  Africa." 

It  is  not,  however,  with  ancient  practices  that  we  are  now 
concerned.  It  is  rather  with  those  mammoth  operations  which 
have  given  a  special  character  to  modern  civilization  and  made 
it  different  from  anything  that  has  preceded  it. 

The  first  operation  is  to  mine  the  ore.  This  needs  no  de- 
scription for  the  present.  The  separation  of  the  metal  from  the 
earthy  substances  usually  associated  with  it  is  effected  in  the 
blast-furnace,  where  it  is  converted  into  pig-iron,  the  crudest 
form  of  manufactured  iron. 

A  modern  blast-furnace  is  a  giant  structure  shaped  some- 
what like  the  chimney  of  a  kerosene-oil  lamp.  The  point  of 
greatest  diameter — where  the  lamp  chimney  swells  out  to  make 
room  for  the  flame — is  called  the  bosh,  frequently  mentioned  in 
this  work.  This  furnace  is  filled  with  a  mixture  of  iron  ore, 
fuel,  and  lime;  and  a  blast  of  air  is  forced  through  it  from  be- 
low. This  draft  at  first  was  cold  air ;  but  an  ingenious  English- 
man discovered,  sixty  or  seventy  years  ago,  that  the  ore  was  re- 
duced more  quickly,  and  with  a  smaller  consumption  of  fuel,  if 
the  blast  was  heated  before  being  forced  into  the  furnace.  To 
the  bewilderment  of  the  scientists  of  that  day  this  simple  change 
resulted  in  doubling  the  iron  product  of  a  given  quantity  of  fuel. 
Before  that  happy  discovery  the  output  of  a  blast-furnace  had 
ranged  from  fifteen  and  a  half  tons  a  week,  in  1788,  to  thirty- 
five  tons  in  1827;  and  at  the  former  date  the  yearly  product  of 
the  whole  of  England  did  not  amount  to  as  much  as  was  recently 
produced  in  four  months  by  a  single  American  furnace.  In 
these  forty  years  the  total  annual  iron  production  of  England 
rose  from  70,000  to  700,000  tons.  In  the  forty  years  following 
the  introduction  of  the  hot  blast  the  furnace  product  rose  from 
thirty- five  tons  weekly  to  four  hundred  tons.  This  shows  a 
wonderful  development  of  the  art  of  iron  production ;  but  the  lat- 


138 


A    GLANCE  AT  PROCESSES 


ter  figure  was  multiplied  seven  times  by  the  Lucy  furnace  in  the 
succeeding  twelve  years,  and  almost  fifteen  times  by  one  of  the 
furnaces  built  since  at  Duquesne. 

In  the  early  blast-furnaces  the  gases  freed  in  the  process  of 
reduction  were  allowed  to  escape  in  flames  at  the  top  of  the 
stack,  illuminating  the  country  for  miles  around ;  but  towards  the 
middle  of  the  nineteenth  century  means  were  devised  for  utiliz- 
ing this  vast  volume  of  flame  for  the  purpose  of  raising  steam 
and  heating  the  blast.  For  the  latter  purpose  it  was  led  from 
the  throat  of  the  furnace  into  ovens  containing  iron  pipes  through 
which  the  blast  was  blown.  These  iron  pipes  limited  the  tem- 
perature of  the  blast 
to  that  of  their  own 
melting-point.  Pres- 
ently the  pipes  were 
displaced  by  enor- 
mous stoves  contain- 
ing fire-brick,  against 
which  the  flames  are 
now  directed.  After 
the  fire  -  brick  has 
been  brought  to  a 
great  heat,  the  gas  is 
turned  into  a  second 
stove,  to  perform  the  same  service  there;  while  the  air-blast 
is  admitted  to  the  first  stove,  where  it  is  raised  to  a  very 
high  temperature — 1200°  to  1600°  Fahrenheit.  So  in  alterna- 
tion the  stoves  are  thus  heated,  and  the  blast  passed  through 
them  one  after  the  other,  on  the  regenerative  principle  invented 
by  Dr.  Siemens.  To  the  higher  degree  of  temperature  thus 
secured  is  due  a  large  part  of  the  increased  output  of  the  Lucy 
and  Isabella  furnaces  during  their  long  contest.  In  the  first 
photograph  of  the  former  made  in  1873  the  stack  seems  to  stand 
alone,  because  the  hot-blast  stoves  were  small  at  this  date.  In 
the  second  illustration  the  stack  can  hardly  be  seen  for  the  stoves, 


Lucy  furnaces,  showing  hot-blast  stoves. 


A  CHILLED  STACK 


139 


which,  indeed,  to  the  untrained  onlooker,  seem  the  most  impor- 
tant part  of  the  plant. 

At  the  time  the  Lucy  furnace  was  built  the  lines  of  blast- 
furnaces were  not  the  graceful  curves  of  the  lamp  chimney  that 


Drawing  the  finished  coke.    The  method  of  charging  the  raw  coal  is  also  seen.     It  is 
dropped  from  the  donkey-car  through  an  opening  in  the  top  of  the  oven. 

has  been  used  to  illustrate  them.  They  were  almost  straight 
lines ;  and  the  bosh  formed  an  angle.  A  few  months  after  the 
Lucy  had  been  started,  the  mass  inside  got  chilled,  so  that  the 
metal  stopped  running  down.  The  furnace  was  therefore  emp- 


140 


A    GLANCE  AT  PROCESSES 


tied ;  and  to  the  surprise  of  everybody  connected  with  it,  the 
wooden  lining  that  had  been  built  to  protect  the  inside  from 
the  first  loads  of  ore,  etc.,  which  were  poured  into  it,  was  found 
in  some  places  almost  intact.  Of  course  it  ought  to  have  been 

burnt  up;  but  in- 
stead of  that  large 
parts  remained  and 
were  hardly  charred. 
This  set  some  men 
thinking;  and  the 
outcome  of  their 
cogitations  was  the 
idea  that  the  shape 
of  the  furnace  was 
all  wrong.  It  was 
evident  that  in  this 
furnace  the  zone  of 


Casting-pit  of  blast-furnace,  where  the  metal  is  made 
into  "pigs." 


fusion  did  not  ex- 
tend beyond  the  narrow  range  of  the  central  funnel,  and  that, 
consequently,  the  benefit  of  its  large  interior  capacity  was 
mainly  lost.  Builders  therefore  gradually  changed  the  shape 
of  furnaces,  cutting  out  all  angles,  lengthening  the  curves, 
and  increasing  the  size  of  the  hearth.  In  1872  the  Lucy 
furnace  was  75  feet  high,  20  feet  in  diameter  at  the  bosh, 
and  9  feet  wide  at  the  hearth.  The  product  was  fifty  to  sixty 
tons  a  day.  In  1902  the  same  furnace  was  90  feet  high  with 
the  same  diameter  of  bosh  as  formerly,  and  I2j4  feet  wide  at 
the  hearth.  The  product  has  been  as  high  as  500  tons  a  day 
and  1 2,000  tons  a  month ;  and  for  every  man  employed  the 
average  product  of  pig-iron  is  now  two  tons  a  day,  as  against 
one  ton  thirty  years  ago. 

The  fuel  first  used  in  blast-furnaces  was  charcoal ;  but  the 
threatened  depletion  of  the  forests  of  Britain  caused  the  substi- 
tution of  pit-coal.  As  early  as  1773  charred  coal  or  coke  was 
tried  in  England ;  but  its  use  did  not  become  general  until  well 


PROCESS   OF  COKING  141 

into  the  last  century.  In  America  charcoal  was  largely  used 
long  after  it  was  found  that  anthracite,  which  is  a  natural  coke, 
was  suitable  for  smelting.  As  related  elsewhere  in  this  work 
the  use  of  coke — or  "cake  "  coal — did  not  become  general  until 
the  early  seventies.  It  was  the  proximity  of  the  Connellsville 
beds  of  bituminous  coal — which  is  singularly  free  from  sulphur 
and  other  impurities — that  gave  Pittsburg  its  leadership  in  the 
iron  industry  of  America. 

The  purpose  of  changing  this  coal  into  coke  is  to  rid  it  of 
the  sulphur  and  phosphorus  which  is  found  in  greater  or  less 
quantities  in  all  soft  coals.  There  is  a  saying  among  iron-workers 
that  these  elements  are  to  iron  what  the  devil  is  to  religion.  As 
a  matter  of  fact  they  are  worse ;  for  there  are  some  good  work- 
able religions  that  could  not  get  along  without  the  devil,  but 
there  is  no  good  workable  iron  with  sulphur  and  phosphorus  in 
it.  The  process  of  coking  consists  of  baking  the  coal  in  hot 
ovens,  so  that,  to  continue  the  theological  simile,  the  diabolic 
parts  are  driven  off  as  flaming  gas  from  the  top  of  the  oven. 
These  flaming  ovens  give  a  wild  and  picturesque  aspect  to  the 
coking  country  as  one  passes  through  it  by  night.  Presently 
the  coal  fuses  into  a  cake,  which  is  cooked  for  forty  to  sixty 
hours,  until  hardly  anything  but  carbon  remains.  This  cake 
is  then  drenched  with  water,  and  pulled  out  of  the  oven  by  a 
door  which  up  to  this  time  has  been  sealed.  The  sudden  cool- 
ing of  the  mass  splinters  it  into  the  form  so  familiar  to  all  who 
travel  on  the  railroads.  In  the  best  furnace  practice  seventeen 
or  eighteen  hundred  pounds  of  coke  are  now  used  to  smelt  one 
ton  of  pig-iron.  In  the  Lucy  furnace  the  amount  first  used 
was  about  double  that  amount. 

The  lime  which  accompanies  the  ore  and  coke  into  the  blast- 
furnace produces  certain  chemical  changes  which  are  too  com- 
plicated for  description  here.  It  also  serves  as  a  flux  to  carry 
away  the  earthy  matters  with  which  the  iron  is  associated  in  its 
mineral  form.  These  residues  constitute  the  slagj  or  scum  of 
the  liquid  iron. 


142 


A    GLANCE  AT  PROCESSES 


The  furnace  is  tapped  about  every  four  hours ;  and  the 
molten  iron  runs,  a  limpid,  glowing  stream,  into  channels  and 
moulds  that  have  been  prepared  for  it,  where  it  cools  and  hard- 
ens into  shapes  which  have  suggested  the  name  "pig."  Hence 
pig-iron.  The  channel  leading  to  the  pigs  is  called  the  "sow, " 
and  as  they  are  seen  lying  together  the  simile  is  obvious. 
In  modern  practice  the  iron  is  usually  poured  into  enormous 

ladles,  which  are 
drawn  by  locomo- 
tives to  the  convert- 
ers, where  it  is  made 
into  Bessemer  steel. 
Before  following 
a  train  of  these  la- 
dles to  the  convert- 
ing house,  it  is  worth 
while  to  see  what  be- 
comes of  the  pigs  of 

Train  of  ladles.  iron  as  SOOn  as  the7 

are  cold  enough  to 

be  taken  out  of  their  moulds.  In  former  days  they  were  usually 
converted  into  wrought-iron  in  such  places  as  the  Union  mills. 
Placed  in  a  puddling-furnace — an  oven  with  a  concave  floor — 
with  a  certain  amount  of  ore  for  "  fettling,"  they  were  reduced 
to  liquid  form  and  boiled  and  stirred  about  until  most  of  the 
impurities  were  driven  off.  When  the  bubbling  mass  thickened 
and  assumed  a  pasty  consistency,  the  puddler  passed  a  long  bar 
through  a  small  opening  in  the  furnace  door,  and  rolled  the  paste 
into  a  ball.  This  ball  was  then  withdrawn  and  carried,  dripping 
with  liquid  fire,  to  a  queer  arrangement  of  big  wheels  which 
crushed  and  rolled  the  ball  over  and  over,  squeezing  out  all  sorts 
of  useless  stuff  and  further  solidifying  the  mass.  This  machine 
has  been  mentioned  in  another  chapter  as  the  squeezer.  The 
ball  was  then  re-heated,  and  passed  under  hammers  and  through 
rollers;  and  the  kneading  it  thus  repeatedly  underwent  gave  it 


THE  JONES  MIXER  143 

the  fibrous  quality  of  wrought-iron.  When  it  had  been  finished 
into  bars  it  was  ready  for  the  market.  This  was  the  material  of 
which  Kloman  made  his  famous  axles. 

The  Bessemer  process  of  steel-making  has  displaced  the  art 
of  puddling,  except  for  a  few  special  purposes.  Steel  rusts  more 
readily  than  iron;  and  for  this  reason  chains  for  cables  are  still 
made  of  puddled-iron. 

Cast-iron  is  pig-iron  mixed  with  ore  and  scrap,  melted  in  a 
cupola  and  then  cast  into  moulds  of  the  shapes  required.  When 
cold  it  is  drilled,  planed,  and  finished  into  the  heavy  parts  of 
machinery  where  great  resistance  is  called  for.  When  fractured, 
cast-iron  is  seen  to  have  a  granulated  form,  like  dirty  sugar ; 
whereas  wrought-iron  has  a  fibrous  quality  that  makes  it  ductile 
and  tough. 

And  now  it  is  necessary  to  return  to  the  train  of  ladles  be- 
fore the  contents  cool.  Covered  with  coke  dust  to  retain  the 
heat,  the  liquid  pig  metal  can  be  transported  a  dozen  miles  to  a 
converter;  and  this  is  sometimes  done.  At  every  curve  and 
bump  of  the  locomotive,  some  of  the  metal  slops  over  the  edge 
of  the  ladle,  and  breaks  into  a  galaxy  of  shooting  stars.  Pres- 
ently the  train  arrives  alongside  the  Jones  mixer,  a  huge  iron 
chest  lined  with  refractory  bricks,  and  capable  of  holding  fifty 
to  two  hundred  and  fifty  tons  of  liquid  pig  metal.  It  is  hung 
on  trunnions,  so  that  it  may  be  swung  to  and  fro  like  a  cradle ; 
for  here  the  contents  of  many  ladles  are  mixed  to  equalize  the 
variations  of  both  chemical  composition  and  temperature  of  the 
furnace  product.  Before  the  invention  of  the  mixer,  the  pig- 
iron  had  to  be  re-melted  in  a  cupola  before  it  could  be  converted 
into  steel.  One  by  one  the  ladles  are  emptied  into  the  mixer, 
the  liquid  flowing  clean  and  creamy,  with  fairy  lights  dancing 
over  its  surface.  Whenever  a  few  drops  spill  to  the  ground 
they  rebound  in  thousands  of  tiny  points  of  fire,  exploding  with 
the  noise  of  a  miniature  fusillade.  A  boy  of  thirteen  or  four- 
teen, his  imp-like  face  black  with  soot,  stands  near  the  flaming 
funnel  of  the  mixer,  shouting  shrill  directions  to  his  fellow 


144  A    GLANCE  AT  PROCESSES 

demon,  who,  somewhere  concealed  among  the  dark  shadows  of 
the  wheels  and  chains  aloft,  reverses  the  five-ton  ladles  with  the 
ease  of  a  society  woman  emptying  her  cup  of  tea.  At  night  the 
scene  is  indescribably  wild  and  beautiful.  The  flashing  fire- 
works, the  terrific  gusts  of  heat,  the  gaping,  glowing  mouth  of 
the  giant  chest,  the  quivering  light  from  the  liquid  iron,  the 
roar  of  a  near-by  converter,  the  weird  figure  of  the  child  and  the 
pipings  of  his  shrill  voice,  the  smoke  and  fumes  and  confusion, 
combine  to  produce  an  effect  on  the  mind  that  no  words  can 
translate.  Dante  in  his  most  hellish  conception  never  ap- 
proached such  a  reality.  The  most  eloquent  preacher  that  ever 
described  the  condition  of  the  damned  was  as  a  babbling  brook 
in  a  soft  summer  landscape  compared  with  this.  And  who  shall 
tell  of  what  goes  on  in  the  giant  chest  where  two  hundred  and 
fifty  tons  of  liquid  iron  have  just  been  poured,  to  be  rocked  to 
and  fro,  a  seething,  swirling,  bubbling  mass  ? 

In  one  aspect  this  is  the  cradle  of  civilization.  Here,  in 
the  Jones  mixer,  goes  on  the  first  of  the  processes  by  which  is 
made  the  steel  of  locomotives,  rails,  and  ships  that  link  race  to 
race  throughout  the  world ;  of  the  engines  of  mines  and  facto- 
ries ;  of  the  machines  of  thousands  of  mills ;  of  the  reapers  and 
harvesters  of  farms ;  of  the  beams  and  angles  and  bars  of  which 
modern  cities  are  largely  built.  Here  rocking  in  this  huge  box 
are  the  springs  of  chronometers  that  keep  pace  with  the  prog- 
ress of  the  stars;  the  needles  that  point  the  manner's  way; 
the  tubes  through  which  the  astronomer  watches  the  birth  of 
worlds ;  the  disks  that  talk  through  a  thousand  "miles  of  space ; 
and  most  of  the  other  miracles  that  make  the  sum  of  modern 
civilization.  To  the  intelligent  onlooker  there  is  as  much  poetry 
in  Jones'  box  as  there  was  in  Pandora's ;  and  even  this  does  not 
contain  all  the  wonders  of  the  beautiful  transformations  which 
have  given  Pittsburg  a  yellow  crown  of  light. 

From  the  mixer  the  molten  iron,  now  uniform  in  composi- 
tion, is  transferred  to  the  converter.  Samples  have  been  quickly 
cooled  and  analyzed,  so  as  to  afford  a  guide  to  future  operations, 


BRILLIANT  PYROTECHNICS  145 

that  the  final  product  may  have  just  the  qualities  of  resistance 
or  ductility  required  of  it.  With  the  same  spluttering  and  scin- 
tillations as  before,  the  liquid  is  poured  through  the  lower  open- 
ing of  the  mixer  into  fresh  ladles,  which  in  turn  are  emptied 
into  an  egg-shaped  vessel.  This  is  the  Bessemer  converter,  the 
most  beautiful  and  perfect  piece  of  mechanism  ever  devised  by 
the  human  mind.  Itself  of  enormous  proportions  and  weight, 
it  is  so  delicately  poised  that  when  filled  with  ten  or  fifteen  tons 
of  liquid  iron,  it  can  be  moved  at  the  touch  of  a  finger.  The 
metal  is  poured  into  the  vessel  while  suspended  in  a  horizontal 
position.  A  blast  of  cold  air  is  then  forced  through  a  number 
of  holes  in  its  lower  end,  and  simultaneously  the  great  oval 
mass  becomes  erect.  Sir  Henry  Bessemer  has  himself  elo- 
quently depicted  the  beauty  of  the  transformation  which  now 
takes  place : 

"  The  powerful  jets  of  air  spring  upward  through  the  fluid 
mass  of  metal.  The  air  expanding  in  volume  divides  itself  into 
globules,  or  bursts  violently  upward,  carrying  with  it  some  hun- 
dredweight of  fluid  metal  which  again  falls  into  the  boiling  mass 
below.  Every  part  of  the  apparatus  trembles  under  the  violent 
agitation  thus  produced  ;  a  roaring  flame  rushes  from  the  mouth 
of  the  vessel,  and  as  the  process  advances  it  changes  its  violet 
color  to  orange,  and  finally  to  a  voluminous  pure  white  flame. 
The  sparks,  which  at  first  were  large  like  those  of  ordinary 
foundry  iron,  change  into  small  hissing  points,  and  these  gradu- 
ally give  way  to  soft  floating  specks  of  bluish  light,  as  the  state 
of  malleable  iron  is  approached.  During  the  process  the  heat 
has  rapidly  risen  from  the  comparatively  low  temperature  of 
melted  pig-iron  to  one  vastly  greater  than  the  highest  known 
welding  heats ;  the  iron  becomes  perfectly  fluid,  and  even  rises 
so  much  above  the  melting-point  as  to  admit  of  its  being  poured 
from  the  converter  into  a  founder's  ladle,  and  from  thence  to  be 
transferred  to  several  successive  moulds." 

The  chemical  changes  accompanying  this  gorgeous  display 
are  equally  beautiful.  The  liquid  pig  metal  contains  a  percent- 
age of  manganese,  silicon,  and  carbon.  If  we  could  conceive 
of  these  elements  as  endowed  with  human  emotion,  we  might 


10 


146  A    GLANCE  AT  PROCESSES 

say  that  every  particle  is  in  love  with  some  atom  of  oxygen. 
The  converting-vessel  is  the  meeting  place  of  the  lovers  and  the 
scene  of  their  marriage.  With  noisy  celebration  the  union  of 
the  little  globules  of  air  and  the  tiny  atoms  takes  place,  and 

emerging  from  the 
lip  of  the  converter 
in  sparkling  radi- 
ance the  happy  pairs 
soar  away  to  spend 
their  short  lives  to- 
gether. Scientists 
stolidly  call  this 
marriage  "  chemical 
affinity. "  Goethe 
named  the  similar 
union  of  human 

Filling  Ingot-moulds  with  molten  steel. 

souls  elective  affin- 
ity. "  The  comparison  suggested  is  not  so  fanciful  as  it  seems. 
Every  atom  of  every  element  in  the  twelve-ton  charge  now  roar- 
ing and  flaming  before  us  will  eventually  find  and  unite  with 
the  atom  of  oxygen  for  which  it  has  an  affinity — chemical  or 
elective  it  matters  not.  It  may  be  this  moment  or  the  next,  in 
the  violent  ebullition  of  the  Bessemer  converter;  it  may  be 
thousands  of  years  hence  in  the  beam  of  a  sky-scraper;  but 
sooner  or  later,  every  atom  of  iron  as  well  as  every  atom  of 
silicon  and  carbon  will  find  its  mate  in  the  oxygen  of  the  air, 
and  so  separate  itself  from  its  fellows.  This  is  a  predestination 
of  matter  not  found  in  theologies. 

When  the  flame  at  the  lip  of  the  converter  becomes  white  it 
is  a  sign  that  the  manganese,  silicon,  and  carbon  have  united 
with  the  oxygen  blown  through  the  mass  and  escaped  into  the 
air.  Now  the  iron  itself  is  following  the  same  course,  and  that 
means  waste.  So  the  youth,  who  has  been  watching  the  con- 
flagration through  colored  goggles  from  a  distant  platform, 
touches  a  lever;  and  the  huge  vessel  slowly  bends  forward  so 


Plate  VIII, 


Courtesy  of  S.  S.  McClure.  Co.  Copyright  by  the  S.  S.  McClure  Co. 

BESSEMER  CONVERTER  IN  OPERATION 


OF  THE 

UNIVERSITY 

OF 


THE  BESSEMER   PROCESS 


as  to  let  the  metal  flow  into  the  body  of  the  converter,  and  un- 
cover the  air-holes  beneath.  With  a  mighty  rush  the  blast  now 
sweeps  along  the  surface  of  the  metal,  detaching  a  million  minor 
particles  of  glowing  matter  and  sending  a  shower  of  sparks 
across  the  converting-pit.  It  is  the  brilliant  finale  of  the  gor- 
geous display.  To  replace  a  part  of  the  lost  carbon,  a  few 
shovelfuls  of  spiegeleisen  or  ferro-manganese  are  thrown  into 
the  mass,  which  is  then  poured  into  moulds,  to  solidify  into 
ingots  of  steel.  When  taken  out  of  the  moulds  the  steel  is 
passed  under  heavy  rollers  to  give  it  the  shapes  needed  for  its 
intended  use  as  rails,  beams,  or  plates,  as  well  as  to  knead  it  into 
that  fibrous  texture  which  we  saw  resulted  from  similar  action 
in  the  making  of  wrought-iron.  The  first  rolling  thus  makes 
blooms ;  and  these  cut  into  lengths  make  billets,  which  again 
are  shaped  into  a  hundred  and  one  things  as  needed.  ,  Such  in 
brief,  and  in  rough  outline,  is  the  process  of  Bessemer  steel 
manufacture. 

Henry  Bessemer,  who  was  knighted  in  recognition  of  his 
beautiful  invention, 
took  out  his  first 
patent  in  1856.  Ten 
years  later  the 
world's  output  of 
Bessemer  steel 
amounted  to  about 
100,000  tons.  By 
1870  it  reached 
300,000  tons.  In 
the  first  year  of  the 
present  century  it 
had  attained  a  total 
of  19,000,000  tons,  of  which  nearly  9,000,000  tons  were  pro- 
duced in  the  United  States. 

Since   1886,  however,  a  newer  method  of  steel-making  has 
grown  with  even  greater  rapidity.     This  is  known  as  the  open- 


steel  ingot  about  to  enter  the  rolls. 


148 


A    GLANCE  AT  PROCESSES 


hearth  basic  process.  It  is  probable  that  this  will  soon  displace 
the  beautiful  and  simple  invention  of  Sir  Henry  Bessemer,  just 
as  the  latter  displaced  puddling. 


Huge  ingot  being  forged  for  armor-plate  under  the  i2,ooo-ton  hydraulic  press  at 

Homestead. 

The  advantage  which  the  basic  open-hearth  possesses  over 
the  Bessemer  converter  is  that  it  enables  the  steel- maker  to  use 
ores  high  in  phosphorus.  It  also  permits  the  easy  working- 
over  of  scrap,  spoiled  ends  of  billets  and  rails,  and  old  stuff  of 


THE   BASIC  OPEN-HEARTH  149 

all  kinds.  At  Homestead  are  two  large  basic  furnaces  from 
which  the  entire  top  can  be  removed ;  and  parts  of  old  machines 
weighing  many  tons  are  lifted  bodily  into  them  for  re-conver- 
sion. Moreover,  the  capacity  of  the  largest  Bessemer  converter 
is  about  fifteen  tons.  In  the  basic  furnace  fifty  tons  are  often 
made  at  once ;  and  the  product  of  several  hearths  can  be  drawn 
at  the  same  moment  to  make  an  ingot  of  a  hundred  and  fifty 
tons  if  desired.  This  has  been  done  at  Homestead. 

The  basic  open-hearth  is  simply  a  huge  and  improved  pud- 
dling-furnace.  A  bath  of  pig  metal  is  used  in  which  to  dissolve 
scrap  of  all  kinds  with  a  mixture  of  ore.  The  charge  and  lin- 
ing of  the  furnace  are  alkaline,  so  as  to  convert  the  acids  of 
phosphorus  into  a  neutral  base,  which,  with  other  so-called 
impurities,  floats  on  the  metal  as  slag  as  it  is  drawn  off.  The 
process  has  none  of  the  picturesque  aspects  of  the  Bessemer  con- 
verter. The  most  interesting  thing  about  it  to  a  layman  is  to 
see,  through  colored  glasses,  how  the  steel  boils  and  bubbles 
as  if  it  were  so  much  milk.  The  bigness  of  it — its  fifty-ton 
ladles  swinging  in  space,  its  hundred-ton  ingots  under  a  twelve- 
thousand-ton  press  as  seen  at  Homestead — makes  it  impressive ; 
but  the  gentle  boiling  of  steel  for  hours  without  any  fireworks 
or  poetry,  in  a  huge  shed  as  empty  of  workmen  as  a  church  on 
week-days,  is  not  a  very  interesting  sight.  Indeed,  it  would 
seem  as  if  all  that  is  spectacular  will  have  been  lost  in  the 
manufacture  of  steel  with  the  passing  of  the  Jones  mixer  and 
the  Bessemer  converter.  To  the  chemist,  however,  the  basic 
process  is  full  of  interest;  but  this  short  description  is  not 
designed  for  him.  In  1886  the  product  of  this  process  was 
218,973  tons  in  America  and  in  England,  694,150  tons.  In 
1902  it  approximated  five  and  a  half  million  tons  in  America, 
and  in  England  three  and  a  half  million  tons.  The  present 
rate  of  increase  in  the  United  States  is  over  a  hundred  thou- 
sand tons  a  month. 


CHAPTER   X 


THE    RISE    AND   GROWTH    OF    HOMESTEAD 

AMITY  HOMESTEAD  was 
the  name  given  by  John  Mc- 
Clure  four  generations  ago  to 
a  quaint  country  seat  which 
he  built  in  the  bend  of  the 
Monongahela  a  mile  or  so  be- 
low Braddock's  crossing,  and 
ten  miles  from  Pittsburg.  He 
is  said  to  have  been  a  fox-hunting  Presbyterian,  with  all  the 
rigorous  rectitude,  blunt  virtues,  and  frank  hospitality  which 
this  implies.  Thus  planting  the  traditions  of  the  old  home  in 
a  new  environment,  he  passed  the  picturesque  place  on  to  his 
son  John,  and  through  him  to  his  grandson  Aldiel.  In  1872  the 
latter  sold  one  hundred  and  thirteen  acres  to  a  banking  and  in- 
surance company ;  and  a  town  was  forthwith  laid  out  and  called 
Homestead.  The  first  sale  of  lots  was  made  to  all  the  old-time 
accompaniments  of  a  brass  band  and  free  junketing;  and  the 
Pittsburg,  Virginia  and  Charleston  Railroad  building  across  the 
empty  lots  the  following  year,  the  town  took  a  good  start  and 
bade  fair  soon  to  grow  as  big  as  the  older  places  in  the  region. 
But  the  panic  of  1873  came  and  gave  it  a  set-back  from  which 
it  was  long  in  recovering.  In  1879  there  were  less  than  six 
hundred  inhabitants  in  the  place. 

On  October  2 1  st  of  that  year,  however,  an  event  occurred  of 
first  importance  in  the  history  of  Homestead.  This  was  the  in- 
corporation of  the  Pittsburg  Bessemer  Steel  Company,  Limited, 
with  a  capital  of  $250,000.  The  founders  of  this  company  were 
all  connected  with  the  firms  which  had  been  supplied  with 

150 


KLOMAN  STARTS  RIVAL    WORKS  151 

merchant  steel  for  a  time  by  the  Edgar  Thomson  Company  and, 
as  already  related,  had  been  suddenly  cut  off  from  supplies 
through  the  refusal  of  that  firm  to  fill  orders  for  billets.  Their 
subscriptions  were  as  follows  : 

Wm.  G.  Park,  of  Park  Bros.  &  Co 5  shares,  $50,000 

Curtis  G.  &  C.  Curtis  Hussey,  of  Hussey,  Wells  &  Co.   5  50,000 

Wm.  H.  Singer,  of  Singer,  Nimick  &  Co 5  50,000 

Reuben  Miller,  of  the  Crescent  Steel  Works 4  40,000 

Wm.  Clark,  of  the  Solar  Iron  and  Steel  Works 4  40,000 

Andrew  Kloman,  of  the  Superior  Mill,  Allegheny 2  20,000 

The  Singer  concern  made  a  specialty  of  tool  cast-steel,  pa- 
tent rolled  saw-plates,  spring  and  plow  steel,  axles,  tires,  etc. 
The  Hussey  firm  made  refined  cast- steel  for  edge  tools,  homo- 
geneous plates  for  locomotives,  boilers,  and  fire-boxes,  and  cast- 
steel  forgings  for  crank-pins,  car-axles,  etc.  Park  Brothers 
were  the  owners  of  the  Black  Diamond  Steel  Works,  and  were 
in  a  somewhat  similar  line ;  while  Kloman  had  leased  the  Supe- 
rior Mill  in  Allegheny  and  had  recommenced  the  manufacture 
of  eye-bars  and  structural  material.  He  was  also  rolling  light 
rails. 

Kloman's  lease  ran  out  in  1879;  and  he  decided  to  build  a 
mill  of  his  own.  He  bought  a  small  tract  of  land  adjoining  the 
City  Farm  at  Homestead,  and  commenced  the  erection  of  a 
building  684  feet  long  by  85  wide ;  to  contain  a  twenty-one  inch 
rail-mill,  two  Universal  mills,  a  sixteen- inch  bar-train,  and  a 
muck-train.  At  the  same  time  the  Pittsburg  Bessemer  Steel 
Company  bought  some  forty  of  fifty  acres  of  land  adjoining 
Kloman's,  and  commenced  the  erection  of  a  converting  works 
and  blooming-mill.  The  two  concerns  were  designed  to  work 
together,  Kloman  taking  the  surplus  product  of  the  Bessemer 
Steel  Company  and  working  it  up  into  structural  shapes.  One 
Universal  mill  and  four  steam-hammers  were  to  be  constantly 
run  on  the  Kloman  patent  solid  eye-bars;  and  he  gauged  the 
capacity  of  his  plant  at  50,000  tons  of  steel  rails  and  30,000 
tons  of  structural  material  annually. 

While  building  his  own  mill  Kloman  supervised  the  erec- 


152  GROWTH  OF  HOMESTEAD 

tion  of  the  adjoining  converting  works;  and  his  skill  and  expe- 
rience, joined  to  those  of  Macintosh  &  Hemphill,  who  had  the 
contract  for  the  engines,  and  later  became  stockholders  in  the 
enterprise,  proved  of  inestimable  value  to  his  associates. 

The  result  was  unsurpassed  not  only  in  the  completeness  and 
efficiency  of  the  works,  but  in  the  rapidity  of  their  construction. 
While  the  Edgar  Thomson  plant  was  over  three  years  in  build- 
ing— a  delay  not  entirely  due  to  the  panic — the  Homestead 
works  were  put  in  operation  fifteen  months  after  the  land  was 
bought.  The  first  steel  was  made  on  March  iQth,  1881,  and 
the  first  rail  on  August  Qth  of  the  same  year. 

Before  the  mill  was  quite  completed,  however,  Kloman  died. 
After  a  life  of  patient  and  fruitful  endeavor,  of  numberless  vic- 
tories in  the  realm  of  invention,  of  successes  ever  ripening  into 
fortune  but  always  falling  at  the  feet  of  others,  the  pathos  of 
his  career  reached  its  culmination  when  hope  was  brightest. 
From  the  very  conception  of  the  great  industry  whose  growth 
we  are  tracing,  until  the  moment  of  his  death,  Andrew  Klo- 
man's  influence  persisted  without  a  break.  He  founded  the 
business  ;  built  the  Twenty-ninth  Street  mill;  rebuilt  and  made 
successful  the  Thirty-third  Street  mill.  He  was  prominent  in 
the  Lucy  Furnace  enterprise ;  and  he  worked  hard  for  the  Edgar 
Thomson  works.  Finally  the  great  Homestead  plant  was  of 
his  founding;  and  even  to-day  some  of  the  machines  he  built 
there  are  running  in  testimony  to  his  thoroughness.  * 

The  Pittsburg  Bessemer  Company  at  once  purchased  Klo- 
man's  unfinished  mill,  and  carried  out  the  contracts  for  rails 
that  he  had  made.  By  September,  1881,  they  were  turning  out 
200  tons  of  rails  a  day  and  had  orders  booked  for  15,000  tons 
at  profitable  prices.  The  Carnegies  looked  on  with  surprise 


"  In  broad  charity,  in  great  patience,  in  uncomplaining  endurance  of 
wrongs^  in  conscientious  veracity  and  uprightness  of  integrity,  in  calmness  and 
serenity  of  manner,  we  recognize  the  higher  type  of  Christian  manhood." — From 
the  resolutions  of  the  Board  of  Directors  of  the  Pittsburg  Bessemer  Steel  Com- 
pany, on  the  death  of  Andrew  Kloman, 


ARBITRARY  MANAGEMENT 


153 


and  alarm.  Up  to  this  time  they  had  been  the  only  makers 
of  rails  in  the  Pittsburg  district.  Here  was  competition  at 
their  very  door.  Councils  of  war  were  held  once  more  on  Brad- 
dock's  Field  ;  for  it  looked  as  if  the  prosperity  which  had  hung 
so  lovingly  over  the  Edgar  Thomson  works  had  now  crossed  the 
river  and  alighted  upon  the  rival  enterprise  at  Homestead. 

Had  the  wisdom  which  governed  the  designing  and  construc- 
tion of  the  works  been  maintained  in  their  management,  it  is 
likely  that  their  initial  prosperity  would  have  continued  until 
they  had  surpassed  their  great  rivals  at  Braddock.  That  the  pos- 
sibilities of  a  phenomenal  success  were  there  was  brilliantly 


3S*6W-£^Lc. 

y^      X   ^'^~    ' 
f e e fit'«/  ifJ2$&££L.& 


Assessment  Jfo  —  K—^^,bem£^i.per  cent  on 
Shares  Stock  of  The  Pittsburgh  Bessemer  Steel  Co.,  Limited 


An  assessment  notice. 

demonstrated  a  few  years  later  under  other  leaders.  But,  un- 
fortunately, there  was  no  Captain  Jones  to  weld  into  unity  the 
conflicting  racial  elements  with  which  the  new  works  were  rilled. 
The  rail-mill  was  controlled  by  the  Welsh  ;  and  if  a  desirable 
post  became  vacant,  it  was  not  filled  by  the  next  man,  but  by 
some  newly  imported  friend  of  the  Welsh  foreman.  The  Irish 
were  supreme  in  the  converting  works  ;  and  in  the  blooming- 
mill  yet  a  third  nationality  was  in  power.  Over  all  was  an  un- 
reasonable and  arbitrary  management  ever  tending  to  open  con- 
flict with  the  workmen.  In  a  few  months  this  conflict  came, 
and  set  up  dissensions  which  ultimately  destroyed  the  corpora- 
tion. 

William  Clark,  who  was  put  in  charge  of  the  works,  was  a 
bitter  opponent  of  labor-unions  ;  and  before  going  to  Homestead 
he  had  incurred  the  dislike  of  the  men  for  his  prowess  as  a 
"  strike-breaker,"  of  which  he  was  rather  proud.  It  was  not 
long  before  the  trouble  he  was  ever  looking  for  came.  One  day 


154  GROWTH  OF  HOMESTEAD 

after  the  furnaces  had  all  been  charged  with  ingots,  the  men 
came  to  him  in  a  body  and  made  some  demand  which  he  had 
previously  refused.  As  a  stoppage  would  have  involved  the 
firm  in  a  great  loss,  the  workmen's  requirements  were  met,  but 
with  mental  reservations  on  the  part  of  Clark.  At  the  end  of 
the  year  he  issued  an  order  requiring  employees  to  sign  an 
agreement  renouncing  their  right  to  join  labor-unions,  and  re- 
quiring union  men  to  leave  their  organizations  at  once.  The 
alternative  presented  was  dismissal  from  the  company's  service. 
Most  of  the  men  were  members  of  the  Amalgamated  Associa- 
tion of  Iron  and  Steel  Workers;  and  on  the  1st  of  January, 
1882,  these  refused  to  sign  the  agreement,  and  were  locked  out. 
After  the  works  had  been  idle  a  week,  the  company  gave  notice 
that  the  men  could  not  return  to  work,  even  if  they  signed  the 
agreement,  unless  they  would  accept  a  reduction  of  wages.  This 
intensified  the  bitterness  of  the  workmen ;  and  the  Amalgamated 
Association  took  cognizance  of  the  dispute. 

At  this  time  the  Amalgamated  Association  was  the  most 
powerful  labor  organization  in  existence,  having  a  membership 
of  70,000,  and  controlling  every  department  of  the  iron  and  steel 
industry.  Except  in  a  few  small  works,  there  was  not  a  wheel 
turning  nor  a  fire  burning  from  Maine  to  Texas  that  was  not 
cared  for  by  an  Association  man.  From  the  newly  established 
furnaces  in  Colorado  to  the  oldest  rolling-mill  in  the  Keystone 
State  the  authority  of  the  Amalgamated  Association  was  almost 
supreme;  and,  generally  speaking,  its  power  at  this  date  was 
beneficently  and  properly  exercised.  Its  origin  may  be  briefly 
outlined. 

In  1858  some  men  in  the  Pittsburg  iron-mills  attempted 
the  formation  of  a  society  for  the  protection  of  working  men 
against  unreasonable  exactions  of  employers,  and  for  the  discus- 
sion and  reform  of  long-standing  grievances.  Inasmuch  as  the 
new  movement  was  regarded  by  employers  with  suspicion,  the 
workmen  were  obliged  to  conduct  their  deliberations  with  se- 
crecy; and  thus  disadvantaged  the  movement  failed.  A  couple 


FIRST  HOMESTEAD    STRIKE  155 

of  years  later  the  effort  was  renewed,  and  the  United  Sons  of 
Vulcan  was  established  by  the  puddlers,  heaters,  rollers,  and 
roughers.  The  new  organization  won  recognition  from  employ- 
ers; and  in  February,  1865,  it  justified  itself  by  securing  the 
first  sliding  scale  of  wages.  Following  the  example  of  the 
Sons  of  Vulcan  came  other  labor  organizations,  until  every  de- 
partment of  iron  and  steel  working  was  included  in  the  move- 
ment. After  the  long  strike  of  1874  the  obvious  advantages  of 
consolidating  these  different  bodies  led  to  the  formation,  in 
August,  1 876,  of  the  Amalgamated  Association  of  Iron  and  Steel 
Workers  of  the  United  States,  with  Mr.  Joseph  Bishop  as  presi- 
dent. In  January,  1880,  Mr.  John  Jarrett  took  Mr.  Bishop's 
place ;  and  the  contest  at  Homestead  now  came  under  his  direc- 
tion. 

Mr.  Jarrett  at  once  sought  an  interview  with  the  managers 
of  the  company;  and  while  his  right  to  meddle  in  the  dispute 
was  not  questioned,  he  was  put  off  from  day  to  day  with  vari- 
ous excuses,  and  was  admitted  to  a  conference  only  after  the 
gravity  of  the  situation  had  been  increased  by  mutual  charges 
and  recriminations  in  the  newspapers.  Nothing  came  of  the 
conference ;  and  the  labor  leaders,  seeing  in  the  attitude  of  the 
owners  of  the  Homestead  mill  a  disposition  to.  attack  the  Amal- 
gamated Association  throughout  the  Pittsburg  district,  threat- 
ened to  call  out  the  men  from  every  other  mill  in  which  these 
owners  were  interested.  "  If  this  condition  of  affairs  continues 
at  Homestead,"  said  Mr.  Jarrett,  "the  stockholders  in  the 
Homestead  works  who  have  mills  in  Pittsburg  may  have  to  fight 
the  association  in  their  own  mills.  We  shall  not  much  longer 
permit  several  firms  to  conveniently  fight  us  in  this  concentrated 
shape."  Response  was  promptly  made  to  this  threat  by  the 
eviction  of  the  striking  workmen  from  the  homes  they  had  rented 
from  the  company.  The  labor  leaders  thereupon  embodied  their 
threat  in  a  formal  resolution,  and  a  date  was  fixed  for  the  sym- 
pathetic strike. 

Thoroughly  alarmed  the  company  now  offered  to  withdraw 


156  GROWTH    OF  HOMESTEAD 

the  objectionable  agreement;  substituting  one  requiring  the 
men  to  give  three  days'  notice  of  an  intention  to  stop  work,  and 
not  more  than  three  men  to  give  such  notice  at  one  time.  This 
might  have  been  satisfactory  to  the  men ;  but  they  refused  to 
accept  the  reduced  scale  of  wages.  In  vain  the  company  urged 
that  the  improved  machinery  at  their  command  made  the  work 
easier  and  the  output  greater  than  at  similar  works.  The  men 
had  won  one  concession  and  were  determined  not  to  yield  a 
point  so  important  as  that  which  remained.  So  both  sides 
made  ready — in  the  newspapers — for  a  general  strike  in  all  the 
works  belonging  to  the  owners  of  Homestead,  to  begin  on  the 
nth  of  March;  and  the  labor  leaders  took  the  opportunity 
of  including  in  their  resolution  three  other  Pittsburg  mills  in 
which  disputes  of  various  kinds  had  long  been  pending.  This 
meant  the  calling  out  of  about  6,000  men,  with  dangerous  pos- 
sibilities of  extensions ;  and  the  manufacturers  of  Pittsburg 
were  not  unnaturally  alarmed  at  the  prospect. 

It  is  interesting  in  the  light  afforded  by  a  hundred  sympa- 
thetic strikes  since,  to  read  the  nai've  expressions  of  opinion 
published  at  that  time  by  the  Homestead  managers.  Mr.  Singer 
"  could  not  see  how  the  Amalgamated  Association  could  order 
a  strike  in  mills  where  there  was  no  trouble  existing  between 
employers  and  employees ;  "  and  similar  views  were  voiced  by 
others  who  took  the  employers'  side  of  the  dispute.  So  the 
thing  went  on,  each  side  daily  publishing  columns  of  protests, 
accusations,  and  threatenings,  until  it  seemed  as  though  all  the 
iron  works  in  Pittsburg  would  be  involved  in  the  struggle. 

The  days  of  grace  accorded  to  the  Homestead  people  thus 
passed  by,  the  dispute  ever  waxing  fiercer — in  the  newspapers 
—until  the  very  eve  of  the  threatened  sympathetic  strike,  when 
the  company  capitulated.  On  the  iith  of  March  the  first 
Homestead  strike  was  reported  settled ;  and  men  of  all  classes 
throughout  the  Pittsburg  district  read  their  papers  that  morning 
with  relief  and  thanksgiving.  It  had  lasted  ten  weeks. 

The  joy  was  short-lived,  however.     The  next  day  misunder- 


THE    TROUBLE   SPREADS  157 

standings  arose  between  Mr.  Clark  and  the  Amalgamated  Asso- 
ciation concerning  the  force  and  scope  of  a  verbal  agreement 
made  at  the  time  of  the  supposed  settlement;  and  the  strike 
was  resumed  with  greater  bitterness  than  ever.  At  Homestead 
there  was  great  excitement,  resulting  in  a  pitched  battle  be- 
tween deputy  sheriffs  and  strikers,  in  outrages  on  "  scabs,"  and 
even  in  murder.  Demands  were  made  for  the  state  militia  by 
the  company,  and  requests  for  fresh  conferences  by  the  labor 
leaders.  The  newspaper  war  was  renewed ;  and  Clark  threat- 
ened to  close  the  works  indefinitely.  Appeal  was  made  by  out- 
side interests  to  the  other  owners,  who,  publicly  vowing  they 
were  powerless,  nevertheless  stepped  between  Clark  and  the 
strikers  and  insisted  upon  a  settlement.  For  a  time  the  con- 
test was  transferred  to  the  council-chambers  of  the  owners  and 
there  waged  with  hardly  less  bitterness  than  before.  Indeed, 
the  differences  which  now  arose  were  mainly  responsible  for  the 
final  disruption  of  the  company. 

Some  degree  of  harmony  was  at  length  reached;  and  on 
March  2Oth  the  newspapers  announced  that  the  strike  was  "  set- 
tled once  more. "  The  terms  of  the  peace  were  so  worded  as  to 
give  it  the  aspect  of  a  compromise.  Practically  it  was  a  vic- 
tory for  the  men.  Clark  promptly  sent  in  his  resignation,  and 
it  was  as  promptly  accepted. 

Encouraged  by  its  success,  the  Amalgamated  Association  a 
few  weeks  later  demanded  a  general  advance  of  five  to  fifteen 
per  cent,  in  the  wages  of  all  iron  and  steel  workers  throughout 
the  country.  A  thunderbolt  out  of  a  clear  sky,  to  which  this 
demand  was  compared,  could  not  have  excited  greater  surprise 
and  consternation.  Anathematizing  the  Homestead  works  and 
all  its  managers,  the  iron  manufacturers  of  the  country  prepared 
for  the  greatest  contest  with  labor  that  had  ever  been  seen. 
June  ist,  1882,  was  the  day  fixed  by  the  association  for  the  be- 
ginning of  this  struggle ;  and  on  that  day  the  Carnegies  and 
two  of  the  firms  connected  with  the  Homestead  works,  who  by 
this  time  had  come  to  hold  the  Amalgamated  Association  in 


IS8 


GROWTH   OF  HOMESTEAD 


awe,  agreed  to  the  latter's  demands.  In  all  other  mills  where 
union  labor  was  employed,  work  was  suspended — in  Pittsburg, 
Wheeling,  Cleveland,  Cincinnati,  St.  Louis,  Springfield,  Chi- 
cago, and  other  places.  The  iron  industry  of  the  country  was 
paralyzed  in  a  day;  and  for  nearly  four  months  the  struggle 
thus  inaugurated  continued,  marked  with  wonderful  endurance 

on  the  part   of  the  men  and  great 
determination  on  the  part  of  the 
manufacturers. 

For  a  while  the  works 
at    Homestead  managed   to 
struggle    along,    under   the 
terms  of  the  settlement,  with 
a  force  composed  partly  of 
union   and    partly    of    non- 
union  men ;    but  the  disor- 
ganization of  the    iron  and 
steel   trade  was   more  than 
it  could  cope  with,  and,  on 
August    2  ist,  the  works  were  shut 
down  for  lack  of  orders,  as   the  manage- 
ment frankly  stated. 

On  September  2ist  the  general  strike  ended 
in  the  complete  discomfiture  of  the  men,  who 
for  over  a  month  had  been  dropping  from  the  Amalgamated 
Association,  starved  into  submission.  The  struggle  had  cost 
millions  and  benefited  nobody. 

On  the  very  next  day  a  fresh  strike  occurred  at  Homestead, 
where  an  effort  had  been  made,  a  couple  of  weeks  before,  to 
start  up  again.  The  cause  was  a  trifling  incident  growing  out 
of  the  previous  dispute.  The  men  objected  to  the  presence  of 
a  "  scab  "  who,  during  the  troubles,  had  shot  one  of  them  in 
self-defence ;  and  to  even  things  up  the  management  also  ex- 
pelled the  workman  who  had  been  thus  wounded. 

The  new  trouble  did  not  last  long;  but  it  served  to  increase 


"Shot  one  of  them 
in  self-defence." 


PURCHASE    OF   THE    STEEL    WORKS         159 

the  discontent  of  the  stockholders  of  the  concern,  whose  greater 
interests  in  their  respective  mills  were  thus  repeatedly  jeopar- 
dized ;  and  their  dissensions  became  acute.  About  this  time, 
too,  the  price  of  steel  was  rapidly  falling;  and,  alarmed  by  the 
imminent  call  for  more  capital,  some  of  the  Homestead  stock- 
holders hastened  to  get  out  of  the  company.  One  of  them  hav-  j 
ing  secured  an  option  on  the  shares  of  some  of  his  associates, 
went  to  the  Carnegies  and  offered  them  the  control  thus 
acquired. 

The  offer  was  promptly  accepted.  Although  trade  was  now 
very  bad  and  daily  growing  worse,  the  Edgar  Thomson  works 
in  the  past  had  been  inconveniently  drawn  upon  for  supplies  of 
steel  by  the  Hartman  Steel  Company  at  Beaver  Falls,  and  for 
billets  by  the  Union  Iron  Mills.  The  Keystone  Bridge  Works 
were  also  using  increasingly  large  quantities  of  steel ;  and  the 
Carnegie  people  were  prompt  to  embrace  the  opportunity  offered 
them  of  acquiring  possession  on  easy  terms  of  a  plant  which 
would  at  once  relieve  the  pressure  from  the  Edgar  Thomson 
works  and  remove  from  their  immediate  neighborhood  a  danger- 
ous rival. 

Accordingly  in  October,  1883,  the  Homestead  mills  became  . 
the  property  of  the  Carnegie  group.  The  price  paid  was  the 
cost  of  the  plant,  with  a  reasonable  allowance  for  increased  land 
values.  Little  cash  was  paid;  and  the  notes  given  in  pay- 
ment were  subsequently  liquidated  out  of  the  profits  of  the 
mills. 

The  Carnegies,  with  a  view  of  holding  for  themselves  the 
markets  created  by  the  old  stockholders,  offered  the  latter  the 
privilege  of  remaining  in  the  enterprise;  but  with  one  unimpor- 
tant exception  they  declined  the  offer,  and,  taking  their  little 
checks  and  notes,  went  out  of  the  enterprise  with  grateful 
hearts.  The  interest  of  the  one  who  remained  was  eventually 
sold  for  about  eight  millions. 

It  is  illustrative  of  the  unfailing  luck  of  the  Carnegies  that 
the  Homestead  works,  thus  acquired  when  the  steel  trade  was 


1 6o 


GROWTH   OF   HOMESTEAD 


suffering  an  unparalleled  depression,  should  pay  their  cost 
within  two  years.  Few  of  the  steel  works  of  the  country  were 
working  up  to  their  full  capacity  at  the  end  of  1883,  and  many 
of  them  were  closed.  At  $35  a  ton,  none  but  the  best-equipped 
mills  could  make  rails  without  loss.  Even  at  this  price  there 
were  few  orders  to  be  had;  and  six  of  the  nine  Western  mills 
were  shut  down.  At  the  beginning  of  December  the  Edgar 

Thomson    had   only 
enough     work     in 
sight  to  last  a  few 
days   and  one    con- 
tingent   order    of 
8,000  tons  of  rails, 
not  to  be  rolled  until 
the  order  had  been 
confirmed.     The 
Homestead      works 
had  been  put  on  bil- 
lets  for  the    Union 
Iron  Mills,  and  had 
only    enough     work    in 
sight    to   keep    running 
till  the  middle   of  Janu- 
ary.     Wilson,   Walker  & 
Co.  stopped  work  on  Decem- 
ber  5th    for  lack  of  orders. 
The    Joliet    mill    had    just    shut 
down ;    and   the   old  Chicago    mill 

"Went  out  of  the  enterprise  with 

grateful  hearts."  had  long    before    stopped   running 

for  like  reasons. 

But  the  Carnegie  partners  had  faith  in  the  future,  and  still 
greater  confidence  in  the  genius  of  the  men  who  had  made  their 
other  enterprises  successful ;  and  so,  utilizing  these  dull  times 
for  repairs  and  changes,  and  profiting  by  low  prices  of  labor  and 
material  for  extensions,  they  struggled  through  the  period  of 


GROWTH   OF   THE  PLANT  161 

depression  and  were  ready  for  the  harvest  of  prosperity  when  it 
came. 

The  conversion  of  the  Homestead  works  to  the  production 
of  steel  specialties  is  a  very  striking  indication  of  the  new  uses 
to  which  steel  was  then  being  put.  As  we  have  seen,  the  works 
— apart  from  Kloman's — were  projected  for  the  manufacture  of 
steel  ingots  and  billets  to  be  used  by  the  crucible  steel-makers 
of  Pittsburg.  They  were  not  now  used  for  their  original  pur- 
pose, but  for  the  manufacture  of  steel  specialties  which  were 
fast  taking  the  place  of  iron.  Steel  bridges  were  now  used  to 
replace  those  of  wood;  and  the  low  price  of  Bessemer  beams 
and  other  structural  shapes  gave  an  impulse  to  their  use  in 
architecture  which,  in  a  few  years,  wrought  the  revolution  cul- 
minating in  the  sky-scraper.  There  were  thus  developed  new 
markets  which  soon  brought  back  prosperity  to  the  trade ;  and 
the  temporary  depression  had  but  served  to  benefit  the  far- 
sighted  manufacturer  who  knew  enough  to  utilize  the  period  of 
low  prices  to  add  to  the  capacity  of  his  works. 

At  the  time  of  its  purchase  the  Homestead  mill  was  already 
one  of  the  best-equipped  plants  of  its  size  in  the  country;  but 
during  the  next  few  years  important  additions  were  made  to  it 
which  put  it  at  the  head  of  the  steel  works  of  the  world.  On 
October,  1885,  a  new  bar  and  angle  mill  was  constructed,  giving 
employment  to  four  hundred  men ;  and  by  the  middle  of  July, 
1886,  the  converting  works,  under  the  skilful  management  of 
Mr.  Julian  Kennedy,  were  turning  out  six  hundred  tons  of 
Bessemer  steel  a  day.  In  the  month  of  March,  1887,  the  two 
four-ton  converters  produced  the  unexampled  total  of  19,572 
tons  of  ingots,  and  further  broke  the  record  with  an  output  of 
915  tons  in  one  day. 

During  their  most  active  period  of  growth  Mr.  Julian  Ken- 
nedy was  superintendent  of  the  works ;  and  their  success  was 
in  no  small  degree  due  to  his  exceptional  engineering  skill. 
Just  as  a  new  era  in  blast-furnace  construction  and  product  was 

inaugurated  under  his  management  at  the  Edgar  Thomson  works 
ii 


MR.    P  HIP  PS'   PROGRESSIVENESS 


163 


in  the  early  '8os,  so  now  was  initiated  a  revolution  in  rolling- 
mill  practice.  The  slabbing-mill,  already  mentioned  as  the 
giant  descendant  of  the  little  Zimmer  mill  at  Kloman's,  was 
erected  by  him,  as  was  also  the  II  9-inch  plate-mill,  the  largest 
machine  of  its  kind  that  up  to  that  time  had  been  built.  A 
slight  modification  in  the  arrangement  of  the  slabbing-mill — a 
machine  that  cost  nearly  a  million — fitted  it  for  the  rolling  of 
armor-plate  and  doubled  its  usefulness.  Mr.  Kennedy  invented 


Ninety-ton  steel  ingot  at  Homestead. 

ingenious  labor-saving  devices  by  which  massive  shapes  of  red- 
hot  steel  were  tossed  lightly  about  at  the  will  of  a  single  oper- 
ator, and  excited  the  wonder,  not  only  of  chance  visitors,  but 
of  trained  engineers  who  travelled  half  round  the  world  to  see 
them. 

By  the  insistent  progressiveness  of  Mr.  Phipps  the  first 
basic  open-hearth  furnace  in  America  was  erected  by  Mr.  Ken- 
nedy at  Homestead,  and  was  so  successful  that  others  followed 
in  quick  succession.  To  this  early  entry  into  a  new  field  and 


1 64  GROWTH   OF  HOMESTEAD 

to  persistent  cultivation  of  it  is  due  the  supremacy  which  the 
Homestead  plant  has  won  over  the  steel  works  of  the  world. 
This  broad  statement  is  verified  by  a  comparison.  In  1886, 
when  the  first  open-hearth  plant  was  built  at  Homestead,  the 
production  of  steel  by  this  process  was  only  a  little  over  200,000 
tons  in  the  whole  of  the  United  States.  Last  year  (1902)  the 
Homestead  works  alone  produced  over  1,500,000  tons  of  open- 
hearth  steel.  This  is  about  twenty-five  per  cent,  of  the  total 
output  of  the  country,  although  there  are  seventy-seven  other 
works  in  America  making  open-hearth  steel.  Added  to  the 
product  of  the  Bessemer  process  this  gives  a  total  of  1,889,000 
tons  of  steel  made  at  Homestead  last  year. 

These  results  are  in  a  large  measure  due  to  the  use  of  natu- 
«/ral  gas  in  the  open-hearth  furnaces.  The  chance  which  placed 
the  Carnegie  enterprises  in  the  natural-gas  region  is  to  be 
credited  with  much  of  their  exceptional  success;  and  in  the 
manufacture  of  open-hearth  steel  this  fortuitous  factor  has  been 
of  first  importance.  The  heating  power  of  natural  gas  is  far 
greater  than  that  of  the  ordinary  "  converter  gas  "  used  else- 
where, thus  making  the  operation  of  fifty-ton  furnaces  an  easy 
matter;  while  its  cost  to  the  Carnegies  does  not  exceed  five 
cents  a  thousand  feet,  thanks  to  the  enlightened  policy  of  Mr. 
1  Frick,  who,  in  spite  of  much  opposition,  secured  large  areas  of 
gas  territory  for  his  firm.  It  is  to  this  single  fact  that  much  of 
the  astonishing  growth  of  the  business,  described  later,  is  due. 

It  is  at  Homestead  that  wonders  are  performed  as  amazing 
as  those  of  the  Arabian  Nights.  Here  machines  endowed  with 
the  strength  of  a  hundred  giants  move  obedient  to  a  touch, 
opening  furnace  doors  and  lifting  out  of  the  glowing  flames 
enormous  slabs  of  white-hot  steel,  much  as  a  child  would  pick 
up  a  match-box  from  the  table.  Two  of  these  monsters,  appro- 
priately named  by  the  men  "  Leviathan  and  Behemoth,"  seem 
gifted  with  intelligence.  Each  is  attended  by  a  little  trolley- 
car  that  runs  busily  to  and  fro,  its  movements  controlled  by  the 
more  sluggish  monster.  This  little  attendant  may  be  at  one 


WONDER-WORKING  MACHINES  165 

end  of  the  long  shed  and  the  Leviathan  at  the  other;  but  no 
sooner  does  it  seem  to  see  its  giant  master  open  a  furnace  door 
and  put  in  his  great  hand  for  a  fresh  lump  of  hot  steel,  than  it 
runs  back  like  a  terrier  to  its  owner  and  arrives  just  as  the  huge 
fist  is  withdrawn  with  a  glowing  slab.  This  the  Leviathan  gen- 
tly places  on  its  attendant's  back ;  and,  to  the  admiration  of  all 
beholders,  the  little  thing  trots  gayly  off  with  it  to  the  end  of 
the  building.  Even  then  the  wonder  is  not  ended;  for  the 
little  fellow  gives  a  shake  to  his  back,  and  the  glittering  mass, 


The  Leviathan  and  its  attendant. 

twice  as  big  as  a  Saratoga  trunk,  slides  onto  a  platform  of  rollers 
which  carry  it  to  the  mill.      And  no  human  hand  is  seen  in  the    * 
operation. 

In  another  place  lady-like  machines  seem  to  dance  lightly 
in  front  of  the  furnaces,  occasionally  stretching  out  a  hand,  seiz- 
ing a  red-hot  billet,  and  waltzing  with  it  to  the  rolling-mill. 
These  marvels  of  mechanical  skill  have  swelling  skirts  that  make  * 
the  idea  of  the  ball-room  irresistible.  Being  suspended  from 
above  so  that  their  mechanism  is  not  visible  by  night,  they  move 
backwards  and  forwards,  from  one  side  to  the  other,  tripping 


1 66  GROWTH  OF  HOMESTEAD 

along  a  row  of  furnaces  and  pirouetting  diagonally  back  with  a 
swift,  graceful,  and  noiseless  sweep  in  a  fashion  that  suggests 
nothing  but  play  and  Virginia  reels.  And  the  beautiful  lumps 
of  steel,  white-hot  and  dripping  with  fire,  are  carried  as  lightly 
as  a  girl's  bouquet,  and  deposited  just  as  lightly  in  the  lap  of 
a  chaperone,  when  their  owner  glides  with  easy  turnings  out 
into  another  dance. 

In  yet  another  place  is  a  comical  being  that  runs  busily  about 
carrying  hot  things  round  corners.  When  this  grotesque  ma- 
chine gets  to  the  end  of  his  track  he  makes  a  quick  half-turn  to 
the  right  and  runs  on  again.  And  all  the  while  he  holds  in 
one  hand  a  long  rubber  tube,  like  a  boy  at  a  May-pole.  This 
contains  the  electric  wires  that  give  him  life  and  intelligence. 

The  wizard  who  has  endowed  these  machines  with  their 
amazing  power  is  a  quiet,  modest  young  fellow,  Alva  C.  Dinkey, 
the  present  superintendent  of  the  great  works.  If  any  of  the 
junior  partners  merit  the  title  of  "  young  geniuses,"  Mr.  Dinkey 
is  certainly  one  of  the  first. 

Mr.  Dinkey  has  also  charge  of  the  four  Carrie  blast-furnaces 
just  across  the  river  at  Rankin,  which  supply  a  part  of  the  pig- 
iron  used  at  Homestead.  One  of  these  was  removed  from  Ohio 
by  the  Carrie  Furnace  Company,  rebuilt  here  in  1883  and  blown 
in  on  February  2Qth,  1884.  Another  was  built  by  the  same 
company  in  1888—90.  The  Carnegie  Steel  Company  built  the 
others.  They  are  each  100  feet  high,  with  2 3 -foot  bosh  and 
15-foot  hearth.  Their  total  annual  capacity  is  672,000  tons  of 
metal,  which  is  hauled,  in  a  molten  state,  by  locomotives  across 
the  river  bridge  to  Homestead.  The  last  built  of  these  furnaces 
produced  206,650  tons  of  pig-iron  in  1902.  This  is  believed  to 
be  the  world's  record. 


CHAPTER    XI 
THE   INCOMING   OF    HENRY   CLAY   FRICK 

IN  1882,  the  iron  and  steel 
business  whose  growth 
we  are  tracing  may  be 
said  to  have  attained  its 
majority.  Just  twenty- 
one  years  had  elapsed 
since  the  building  of  the 
Kloman  mill  at  Twenty- 

Coke-ovens.  . 

ninth    Street,    when   the 

infant  industry  emerged  from  the  embryonic  state  of  Girty's 
Run.  Thanks  to  skilful  nursing,  it  had  passed  easily  through 
the  dangers  and  diseases  of  childhood;  and  under  the  stimulat- 
ing pabulum  of  a  high  tariff  it  had  waxed  big  and  lusty  beyond 
all  precedent.  Like  most  overgrown  things,  however,  it  was 
ill-proportioned  and  awkward.  There  was  an  uncertainty 
about  its  movements  which  showed  that  its  physical  growth 
had  outstripped  its  mental  development.  There  was  none  of 
that  harmonious  working  of  parts  and  effective  unity  of  in- 
terests which  bespeak  the  well-balanced  organism. 

This  was  now  to  be  changed — not  suddenly  and  by  a  con- 
scious effort,  but,  as  is  the  nature  of  all  growth,  quietly,  gradu- 
ally, and  by  unnoticed  movements. 

The  most  conspicuous  step  in  the  mental  evolution  of  this  \ 
industrial  organism  was  the  simple  and  prosaic  incident  which 
brought  Henry  Clay  Frick  into  contact  with  it.  At  the  time 
this  seemed  a  very  commonplace  occurrence.  Similar  things 
had  happened  in  the  history  of  the  enterprise  a  dozen  times 
without  attracting  more  than  a  passing  attention.  The  present 

167 


1 68  HENRY   CLAY  FRICK 

one  produced  a  revolution.  A  simile  from  the  science  of  biol- 
ogy suggests  itself.  One  of  the  lowest  forms  of  life  exists  as  a 
little  floating  globe  of  jelly,  which  surrounds  and  absorbs  into 
itself  every  smaller  thing  that  bumps  against  it.  Sometimes, 
however,  a  more  highly  developed  creature  comes  along  and 
reverses  the  process.  Something  akin  to  this  happened  now. 

Up  to  the  time  of  the  incoming  of  Mr.  Frick  the  group  of 
men  with  whom  he  now  allied  himself  had  had  no  definite  pol- 
icy. The  several  industrial  establishments  had  all  been  started 
by  some  outer  accident,  and  each  had  developed  along  its  own 
line  as  the  needs  of  the  day  required,  and  as  the  fostering  hand 
of  the  Government  was  laid  more  or  less  kindly  upon  it.  The 
Kloman  germ  grew  under  the  stimulus  of  the  war;  and  the 
Twenty-ninth  Street  mill  was  built  to  meet  the  increased  de- 
mand for  Kloman  axles.  The  Cyclops  or  Thirty-third  Street 
mill  was  but  an  accidental  offshoot  of  the  Kloman  stem;  and 
the  business  of  both  grew  with  the  country's  growth  and  the 
general  development  of  the  iron  trade.  The  Keystone  Bridge 
Company  was  simply  the  incorporation  of  an  existing  business. 
The  suggestion  of  the  Lucy  furnaces  came  from  outside ;  as 
did  also  that  which  resulted  in  the  steel  business  at  Braddock. 
The  Homestead  works  were  built  by  outsiders ;  and  their  absorp- 
tion by  the  Carnegie  group  was  a  mere  accident.  And  yet,  in 
conformity  with  those  laws  underlying  all  growth,  the  line  of 
progress  was  one  which  ever  tended  to  round  out  and  complete 
the  series  of  operations  in  the  conversion  of  crude  iron  ore  into 
finished  materials.  But  this  was  a  natural  and  unconscious 
development  growing  out  of  trade  conditions.  There  was  at  no 
time  a  well-defined  plan  or  policy  of  expansion. 

With  the  incoming  of  Mr.  Frick,  however,  this  vague  pro- 
gression at  once  assumed  a  definite  character.  It  was  the 
marshalling  of  hosts  into  a  coherent  unit,  with  one  mind  ruling 
all  for  the  good  of  each. 

To  give  a  just  idea  of  the  revolutionary  character  of  the 
changes  inspired  by  Mr.  Frick,  it  is  necessary  to  anticipate 


Plate  IX, 


HENRY  CLAY  FKICK 


A    MIRACLE    OF  INDUSTRIALISM  169 

events  a  little,  and  give  a  rough  outline  of  the  perfected  organi- 
zation which  he  built  up  out  of  the  scattered  units  which  he 
found.  These  units  were  the  Upper  and  Lower  Union  Mills, 
the  Lucy  Furnaces,  the  Edgar  Thomson  Steel  Works,  the  Key- 
stone Bridge  Works,  the  Pittsburg  Bessemer  plant  at  Homestead, 
and  the  little  interests  in  coke  and  coal  at  Larimer  and  Unity, 
and  in  ore  at  Scotia.  There  was  also,  at  Beaver  Falls,  the 
Hartman  Steel  Works,  an  unqualified  failure  and  source  of 
uninterrupted  vexation  to  its  owners.  Apart  from  the  Edgar 
Thomson  works  and  the  Upper  Union  Mill,  which  had  been 
consolidated,  each  of  these  plants  had  its  separate  organization. 
Such  exchange  of  benefits  as  was  possible  among  them  was  off- 
set by  the  petty  factions  and  jealousies  which  the  Carnegie  sys- 
tem of  unfriendly  rivalry  had  established. 

While  there  was  a  feeble  attempt  at  consolidation  made  in 
1886,  before  Mr.  Frick  assumed  supreme  power,  it  did  little 
more  than  modify  the  disunion  described.  Once  in  control, 
Mr.  Frick  assembled  these  disorganized  units  into  a  solid,  com- 
pact, harmonious  whole,  whose  every  part  worked  with  the  ease 
and  silent  motion  of  the  perfectly  balanced  machine.  This 
mammoth  body  owned  its  own  mines,  dug  its  ore  with  machines 
of  amazing  power,  loaded  it  into  its  own  steamers,  landed  it  at 
its  own  ports,  transported  it  on  its  own  railroads,  distributed  it 
among  its  many  blast-furnaces,  and  smelted  it  with  coke  simi- 
larly brought  from  its  own  coal-mines  and  ovens,  and  with 
limestone  brought  from  its  own  quarries.  From  the  moment 
these  crude  stuffs  were  dug  out  of  the  earth  until  they  flowed 
in  a  stream  of  liquid  steel  into  the  ladles,  there  was  never  a 
price,  profit,  or  royalty  paid  to  an  outsider.  Without  any  cessa- 
tion of  motion  and  with  hardly  any  loss  of  heat,  this  product 
passed  with  automatic  precision  into  the  multitudinous  machines 
which  pressed  it  into  billets,  rails,  armor-plate,  bridge  structures, 
beams,  and  the  endless  variety  of  shapes  required  in  modern 
architecture.  Finally  these  highly  finished  materials  were  often 
conveyed  to  consumers  over  the  same  transportation  systems  as 


i;o  HENRY   CLAY  FRICK 

before ;  and  the  profit  of  every  movement,  as  of  every  process 
and  change  of  form,  passed  without  deduction  into  the  exchequer 
of  what  was  now  the  Carnegie  Steel  Company,  Limited — a 
single  organization  with  one  mind,  one  purpose,  one  interest. 
The  annual  earning  power  of  this  great  institution  increased 
under  Mr.  Frick's  direction  from  $1,941,555  to  $40,000,000 
in  a  dozen  years ;  while  its  annual  product  of  steel  increased 
during  the  same  period  from  332,111  tons  to  3,000,000  tons. 
The  change  thus  baldly  and  inadequately  expressed  in  terms  of 
dollars  and  tons  makes  the  most  impressive  record,  for  such  a 

short  period,  of  any  manufacturing 
*  i   rf  organization  in  this   or  any  other 

country. 

Henry  Clay  Frick,  to  whose 
remarkable  executive  and  admin- 
istrative ability  this  miracle  of 
industrialism  is  due,  was  only 
thirty-three  years  of  age  when  he 
joined  the  Carnegies;  and  already 


© 


he    had    achieved  the   most   note- 


worthy success  in  the  coke  indus- 
VVP  try     of    Pennsylvania.       Born    at 

West     Overton    in     1849,    young 

"Small  farm  chores."  FHck    ^    found    ^    ^Q    age  of  ten 

gathering  sheaves  in  the  wheat-fields,  carrying  wood  and  water, 
and  doing  such  small  farm  chores  as  came  within  his  child's 
strength.  This  was  his  way  of  spending  the  summer  holidays. 
It  afforded  him  the  best  of  exercise,  and  probably  gave  him  that 
vigor  and  recuperative  power  which,  later,  astonished  the  sur- 
geons who  were  probing  to  find  the  assassin's  bullets  in  his 
sadly  wounded  body.  In  undertaking  this  farm  work  the  child 
acted  on  his  own  impulse.  He  did  it  to  earn  enough  money 
to  buy  his  clothes.  Then  he  went  back  to  school,  where  he 
displayed  the  same  earnestness  of  purpose.  At  the  age  of 
fourteen  he  not  only  bought  his  own  clothes  but  entirely 


THE  ROMANCE   OF  COKE  171 

maintained  himself,  working  behind  the  counter  of  a  country 
store.  At  nineteen  he  became  bookkeeper  in  his  grandfather's 
flouring-mill  and  distillery  at  Broad  Ford,  in  the  centre  of 
what  is  now  the  Connellsville  coke  region.  At  the  threshold 
of  manhood  he  thus  found  himself  fortuitously  placed  in  the 
field  of  his  future  activities,  where  he  was  destined  to  find  both 
wealth  and  honor. 

The  history  of  the  development  of  the  Connellsville  region 
is  necessarily  a  sketch  of  the  personal  career  of  Henry  Clay 
Frick.  He  was  one  of  the  first,  even  at  this  youthful  age,  to 
recognize  the  importance  to  the  expanding  iron  industries  of 
Western  Pennsylvania  of  this  wonderfully  rich  deposit  of  cok- 
ing coal.  He  has  been  the  leading  spirit  in  its  development ; 
so  that  to-day,  in  some  of  the  iron-producing  centres  of  the 
United  States,  Connellsville  coke  is  known  only  as  Frick  coke. 
He  built  railroads  for  transporting  it ;  and  he  alone  effected  the 
consolidation  of  the  industry  as  it  now  stands. 

Every  great  industry  has  its  romance.  That  of  Connells- 
ville coke  began  in  1842,  when  a  couple  of  small  barges  loaded 
with  it  were  floated  down  the  Ohio  to  Cincinnati.  There  the 
furnace  men  looked  on  it  with  suspicion  and  called  it  "  cinders." 
It  was  sold  in  small  lots  at  eight  cents  a  bushel ;  and  a  large 
quantity  remained  after  three  weeks'  effort  to  dispose  of  it. 
This  remainder  was  finally  traded  for  a  small  patent  grist-mill, 
which  was  brought  to  Connellsville,  and  turning  out  to  be  a 
failure,  was  there  sold  for  $30. 

But  the  foundryman  who  got  the  coke  afterwards  thought 
well  enough  of  it  to  make  a  trip  to  Connellsville  to  get  more. 
In  this  he  was  disappointed.  No  one  was  willing  to  repeat  the 
experiment,  for  a  time  at  least.  In.  1850  there  were  only  four 
establishments  making  coke  in  the  whole  of  the  United  States. 
In  1860  the  census  shows  that  there  were  twenty-one  such 
establishments,  all  in  Pennsylvania;  and  ten  years  later,  when 
Frick  had  already  appeared  on  the  scene  and  had  become  inter- 
ested, there  were  but  twenty-five  coking  plants  in  the  country. 


i;2  HENRY  CLAY  FRICK 

In  1871  young  Frick  organized  the  firm  of  Frick  &  Co.  with 
Abraham  O.  Tintsman,  one  of  his  grandfather's  partners,  and 
Joseph  Rist.  They  had  three  hundred  acres  of  coal  lands  and 
a  plant  of  fifty  coke-ovens.  At  this  time  there  were  not  four 

hundred  ovens  in  the  whole 

Connellsville  region,  which 
included  an  area  of  one 
hundred  square  miles.  The 
Mount  Pleasant  and  Broad 
Ford  Railroad,  of  which 
Frick  was  one  of  the  pro- 
jectors, was  opened  about 
the  same  time.  The  next 
year  Frick  &  Co.  erected 

Coke-ovens  under  construction. 

one  hundred  and  fifty  more 

ovens.  Then  the  panic  of  1873  came,  and  everybody  but  Frick 
thought  the  business  had  come  to  an  end.  But  he  had  gauged 
its  possibilities ;  and,  with  a  confidence  in  the  country's  growth 
rare  in  one  of  his  years,  he  realized  that  the  depression  was  of 
that  tidal  character  which  would  eventually  carry  the  business 
to  higher  levels  than  before.  Timid  competitors  anxious  to 
sell  out  at  any  price  found  a  ready  purchaser  in  the  firm  of 
Frick  &  Co. ;  and  in  the  lean  years  following  the  panic  he 
acquired  the  interests  of  his  partners,  who,  burdened  with 
unpaid-for  purchases,  staggered  and  finally  fell  in  the  storm. 
By  a  singular  paradox  the  panic  which  ruined  his  partners 
made  Henry  C.  Frick' s  fortune.  When  the  trouble  had  passed, 
the  price  of  coke  rose  from  ninety  cents  to  $4  and  $5  a  ton ; 
and  the  boom  put  young  Frick  at  the  head  of  the  coke  industry. 
By  1882,  when  Frick  admitted  the  Carnegies  into  his  business, 
he  had  acquired  1,026  ovens  and  3,000  acres  of  coal  land. 

The  business  was  now  reorganized  with  a  capital  of  $2,000,- 
ooo;  and  a  year  later  this  was  increased  to  $3,000,000  to  keep 
pace  with  the  expansion  of  the  trade.  By  1889,  when  its  capi- 
tal was  increased  to  $5,000,000,  the  H.  C.  Frick  Coke  Com- 


A    GREAT  BUSINESS 


173 


pany  owned  and  controlled  35,000  acres  of  coal  land  and  nearly 
two-thirds  of  the  15,000  ovens  in  the  Connellsville  region,  three 
water  plants  with  a  pumping  capacity  of  5,000,000  gallons  daily, 
thirty-five  miles  of  railroad  track,  and  1,200  coke-cars.  The 
company  employed  11,000  men.  The  volume  of  shipments 
amounted  to  1,100  car-loads  a  day,  or  330,000  cars  a  year. 
This  is  equivalent  to  10,000  train-loads,  which,  strung  together, 
would  extend  from  New  York  to  San  Francisco,  or  from  London 
across  the  continent  of  Europe,  through  Persia,  and  well  on  the 
road  to  India. 

In  1895  the  capital  of  the  H.  C.  Frick  Company  was  further 
increased  to  $10,000,000.     It  now  owned  1 1,786  ovens;  40,000 

acres  of   Connellsville  coal      . 

lands,  out  of  a  total  of  sixty 
to  sixty-five  thousand  acres, 
and  its  capacity  was  25,000 
tons  of  coke  a  day,  or  eighty 
per  cent,  of  the  entire  pro- 
duction of  the  Connellsville 
region.  A  little  later  its 
monthly  output  amounted  to 
an  even  million  tons ! 

Coke-ovens  under  construction. 

Such,  baldly  stated,  are 

the  achievements  of  the  man  who  from  now  on  becomes  the 
most  conspicuous  and  imposing  figure  in  this  history. 


CHAPTER    XII 


THE    CAPTURE    OF     THE    DUQUESNE    STEEL 

WORKS 

MR.  FRICK'S  first  great  achievement 
after  assuming  the  leadership  of  Car- 
negie Brothers  &  Co.  was  the  capture 
of  the  rival  steel  works  at  % 
Duquesne,  on  the  Monon- 
gahela  River,  a  short  dis- 
tance above  Homestead 
and  Braddock.  This  mas- 
terly move  eliminated  a 
dangerous  competitor  from 
the  rail  market,  and  gave 
the  Carnegies  one  of  the 
most  modern  and  best-  ' 
equipped  steel  works  in 
the  country  without  the 
outlay  of  a  single  dollar. 
Even  the  unparalleled  rec- 
ord of  Carnegie  successes  contains  no  greater  industrial  victory 
than  this;  and  business  men  in  Pittsburg  still  regard  it  as  the 
greatest  example  of  skilful  financiering  and  management  in  the 
history  of  the  American  steel  trade. 

The  building  and  early  history  of  the  Duquesne  steel  works 
recall  those  of  Homestead.  In  a  sense,  indeed,  the  former  may 
be  considered  a  continuation  of  the  latter ;  for  they  were  planned 
for  similar  reasons,  completed  by  the  same  men,  failed  for  kin- 
dred causes,  and  were  eventually  sold  to  the  same  purchasers. 
The  Duquesne  Steel  Company  was  organized  on  June  4th, 

17* 


Kloman's  successor  forging  an  axle. 


TO   CHECK  COMPETITION  175 

1886,  with  a  capital  of  $350,000.  Before  the  plant  was  com- 
pleted, disagreements  arose  among  the  promoters,  and  these, 
joined  to  a  call  for  more  money,  resulted  in  the  suspension  of 
construction  work.  The  enterprise  was  subsequently  reorgan- 
ized ;  and  the  Allegheny  Bessemer  Steel  Company  was  formed, 
in  March,  1888,  with  a  capital  of  $700,000,  to  take  over  the 
unfinished  plant  and  carry  it  through  to  success.  Among  the 
incorporators  were  E.  L.  Clark  of  the  Solar  Iron  Works  and 
William  G.  and  D.  E.  Park  of  the  Black  Diamond  Steel  Works. 
These  gentlemen  subscribed  for  nearly  six-sevenths  of  the  total 
capital.  The  other  members  of  the  corporation  were  also 
practical  men.  Mr.  C.  Ansler,  consulting  engineer  of  Macin- 
tosh &  Hemphill,  superintended  the  building  of  the  works;  and 
neither  money  nor  pains  were  spared  to  equip  them  with  the 
most  improved  machinery.  The  buildings  were  of  an  unusually 
substantial  and  enduring  character.  They  comprised  convert- 
ing and  blooming  house,  75  feet  by  200;  a  rail-mill  68  feet  by 
380;  a  building  covering  the  hotbeds  80  feet  by  200;  while 
the  wings  inclosing  the  finishing  machinery  were  48  feet  by 
64.  There  were  two  Bessemer  converters,  each  with  a  capacity 
of  seven  tons. 

Operations  were  commenced  in  the  blooming-mill  on  Feb- 
ruary Qth,  1889,  and  a  month  later  in  the  rail-mill.  The  long- 
threatened  competition  with  the  Carnegie  rail  monopoly  in  the 
Pittsburg  district  had  begun.  It  was  met  by  Andrew  Carnegie 
in  a  distinctly  original  fashion. 

The  Duquesne  people,  in  their  search  for  improved  methods, 
had  planned  to  run  their  ingots  from  the  soaking-pits,  without 
further  heating,  through  the  various  rolls  that  pressed  them 
into  billets  and  rails.  This  was  an  unheard-of  innovation  in 
America,  although  something  of  the  kind  had  been  done  in  Eng- 
land; and  Sir  Henry  Bessemer  had  long  ago  predicted  that  the 
practice  would  become  general.  The  ingots,  having  passed 
through  the  32-inch  blooming-mill,  went  at  once  through  the 
26-inch  roughing-train.  After  shearing,  the  piece  went  straight 


1/6 


CAPTURE   OF  DUQUESNE 


on  to  the  two  finishing-trains,  which  were  equipped  with  espe- 
cially powerful  engines.  Thus  the  re-heating  of  ingots  was 
dispensed  with ;  and  from  the  mould  to  the  finished  rail  the 
steel  passed  only  once  through  the  furnace,  instead  of  twice 
or  thrice,  as  in  other  works. 

On  learning  of  the  adoption  of  this  economy  by  a  competi- 
tor, Andrew  Carnegie  drafted  a  circular  to  the  railroads,  warn- 


Ingots  going  from  the  Duquesne  soaking-pits  to  the  rolls.    The  mechanical 
perfection  is  shown  by  the  small  number  of  workmen  visible. 

ing  them  against  using  the  rails  thus  made,  which  he  repre- 
sented as  defective  through  lack  of  homogeneity.  Although 
this  was  not  believed  by  the  Carnegie  officials,  the  circular, 
having  been  sent  to  Pittsburg  for  that  purpose,  was  printed 
and  mailed  to  the  purchasing  agents  of  the  railroads  throughout 
the  country.  When  asked  if  he  considered  this  a  legitimate 
form  of  competition,  one  of  the  Carnegie  partners  of  that  time 
replied  that  "  under  ordinary  circumstances  he  would  not  have 


TROUBLE    WITH  LABOR 


177 


thought  it  legitimate ;  but  the  competition  set  up  by  the  Du- 
quesne  people  was  also  not  legitimate,  because  of  their  use  of 
this  direct  rolling  process."  In  further  self -justification  he 
added  :  "  They  were  a  thorn-  in  our  flesh  and  they  reduced  the 
price  of  rails.  If  they  had  made  rails  by  our  method,  w*e 
would  have  recognized  them  as  legitimate  competitors ;  but 
when  we  were  attacking  their  method  of  rolling  we  could  not 
recognize  them  by  letting  them  take  a  contract." 

Pressed  to  explain  the  last  sentence,  Mr.  Carnegie's  partner 
said :  "  We  could  not  divide  business  with  them  as  we  other- 
wise would  have  done." 

It  is  worthy  of  remark   that  this  method  of  direct  rolling 
was  not  abandoned  when  the  Carnegies  acquired  the  Duquesne 
mills.      On   the   contrary  it  was 
adopted  in  all  their  other  works, 
and    is    now  general   throughout 
the     country.       Presumably 
steel-makers  have  learned  to 
overcome  the  lack  of  homo- 
geneity  against   which    Mr. 
Carnegie  warned  the  railroads. 

The  mechanical  superiority 
which  the  Duquesne  works 
showed  over  every  similar  plant  in 
the  country  was  not  enough  in  it- 
self to  offset  the  deficiencies  of 
management  which  soon  became  manifest.  There  were  also 
contentions  with  labor.  The  old  antagonism  to  trades-unions 
that  brought  trouble  to  the  first  owners  of  Homestead,  cropped 
out  at  Duquesne.  Signs  were  put  up  all  over  the  yards  and 
shops  announcing  that  "  no  union  men  are  allowed  on  these 
works."  When  Mr.  William  G.  Park  saw  them  he  gave  orders 
that  such  signs  as  were  accidentally  destroyed  should  not  be 
renewed.  The  directors  dared  not  discredit  their  manager  by 
removing  the  offensive  placards;  but  they  let  it  be  quietly 


The  offensive  placards. 


1 78  CAPTURE   OF  DUQUESNE 

known  that  a  driver  who  knocked  one  of  them  down  and  de- 
stroyed it  would  not  be  punished  for  carelessness.  Some  of 
these  signs  were  still  in  existence  when  Mr.  Frick  bought  the 
works. 

There  were  also  defects  in  the  operating  department ;  so 
that  large  quantities  of  second-  and  third-rate  rails  accumulated 
in  the  yards.  The  dissatisfaction  of  the  owners  with  the  man- 
agement was  augmented  by  several  serious  losses  growing  out 
of  undesirable  contracts.  In  fairness  to  the  managers,  however, 
it  should  be  confessed  that  they  were  really  obliged  to  take 
these  contracts  in  order  to  keep  running ;  for  the  rail  pool,  at 
the  instigation  of  the  Carnegies,  constantly  headed  them  off 
from  all  desirable  business,  and  obliged  them  to  take  such  orders 
as  no  mill  in  the  pool  wanted.  As  a  result  the  stockholders 
were  soon  called  upon  for  additional  capital.  First  $100,000 
was  called  for;  then  twice  .as  much.  This  the  stockholders 
refused;  and  Mr.  William  G.  Park  had  to  pay  it  all.  So  that  a 
suggestion  from  Mr.  Frick  that  the  Carnegie  Company  might 
buy  the  property  at  a  bargain  found  Mr.  Park  in  a  particularly 
receptive  mood. 

The  price  first  talked  about  by  Mr.  Frick — $600,000 — was 
considered  too  low  by  Mr.  Park,  as  no  doubt  it  was.  The  works 
had  cost  nearly  twice  that  sum.  They  had  made  as  much  as 
five  hundred  tons  of  rails  and  billets  in  twenty- four  hours ;  and 
while  their  cost  from  pig-iron  to  rails  was  high — $8.14  in 
October,  1889 — the  stockholders  were  loath  to  accept  any  very 
great  loss.  On  the  other  hand,  Mr.  Frick  showed  no  disposi- 
tion to  increase  the  bid  which  he  had  thrown  out  in  a  tentative 
way ;  and  so  the  thing  dragged  on  for  nearly  a  year.  During 
this  time  Mr.  Park  obtained  options  on  his  partners'  holdings ; 
and  when  the  negotiations  were  resumed  he  was  able  to  offer 
the  entire  stock  of  his  company.  During  the  month  of  August 
preceding  the  final  sale  the  output  of  the  rail-mill  was  the  largest 
in  its  history — 16,814  tons.  The  output  of  raw  steel  was  over 
20,000  tons ;  and  1 7,000  tons  of  blooms  were  made. 


BRILLIANT  FINANCIERING  179 

On  this  showing  Mr.  Frick,  in  October,  1890,  raised  his 
bid  for  the  plant  to  $1,000,000  in  bonds,  material  on  hand  to 
be  appraised  and  paid  for  in  cash.  On  the  3Oth  of  the  month 
this  offer  was  accepted;  and  a  couple  of  weeks  later  the  plant 
was  turned  over  to  the  Carnegies.  Once  more  they  were  with- 
out a  rival  rail-mill  in  their  own  territory. 

At  this  time  the  works  consisted  of  two  seven-ton  converters, 
six  cupolas — four  for  iron  and  two  for  spiegel — seven  soaking- 


•1 


Copyright  by  S.  S.  McClure  Co. 

Pouring  steel  from  converter  into  ladle. 

pits,  four  trains  of  rolls,  and  the  necessary  boilers,  engines,  and 
other  equipment  to  successfully  operate  a  blooming  and  rail  mill 
of  that  size. 

It  is  commonly  believed  in  Pittsburg  that  the  plant  thus 
bought  with  nothing  but  an  issue  of  bonds,  paid  the  new  owners 
$1,000,000  in  the  first  sixty  days.  This  is  not  true;  but  the 
works  did  pay  for  themselves  within  a  year,  for,  with  his  habit- 
ual foresight,  Mr.  Frick  had  provided  a  market  for  their  prod- 
uct before  he  bought  them.  The  rail-train  was  changed  to 
make  billets  ;  and  these  were  promptly  marketed  at  good  prices. 


i8o  CAPTURE    OF  DUQUESNE 

Before  the  bonds  became  due  the  plant  had  paid  for  itself  six 
times  over;  and  the  surplus  earnings  had  gone  into  the  construc- 
tion of  four  large  blast-furnaces. 

Mr.  Frick  always  had  an  instinct  for  picking  out  the  right 
man  for  every  place ;  and  his  intuition  did  not  fail  him  when 
he  selected  Thomas  Morrison  for  Duquesne's  first  superintend- 
ent under  the  new  regime.  This  young  man  was  a  distant  con- 
nection of  Andrew  Carnegie;  but  he  made  no  attempt  to  trade 
the  fact  for  favors.  He  took  a  humble  place  in  the  machine- 
shops  at  Homestead,  and  caught  the  notice  of  his  superintend- 
ent, Mr.  Potter.  Mr.  Prick's  attention  having  been  drawn  to 
the  youth,  he  watched  him  for  a  while,  and  decided  that  he  was 
capable  of  better  things  than  he  was  doing.  Greatly  to  the 
young  man's  surprise  he  was  selected  for  the  responsible  posi- 
tion of  superintendent  at  Duquesne.  Here  the  men  tried  to 
take  advantage  of  his  youth ;  but  he  met  the  attempt  with  dig- 
nity, and,  being  supported  by  the  firm,  had  no  further  trouble 
of  that  kind.  In  one  of  Mr.  Prick's  weekly  reports  in  June, 
1891,  he  says:  "Matters  have  been  looking  threatening  at 
Duquesne.  Morrison  has  handled  the  matter  very  well.  He 
is  not  much  of  a  talker."  In  that  he  was  a  man  after  Mr. 
Prick's  own  heart. 

Early  in  1892  Morrison  was  instructed  to  get  up  plans  for 
two  blast-furnaces  at  Duquesne,  which  he  did ;  and  the  same 
month  he  was  given  a  small  interest  in  the  Carnegie  Company. 
During  this  time  the  plant  was  being  operated  as  the  Allegheny 
Bessemer  Steel  Company,  the  former  owners  not  having  yet 
closed  all  the  old  transactions.  By  July  this  had  been  done ; 
and  the  plant  was  taken  into  the  consolidation  of  all  the  Car- 
negie works  that  formed  the  Carnegie  Steel  Company. 

Owing  to  the  disturbing  effects  of  the  Homestead  strike  the 
two  Duquesne  furnaces,  planned  early  in  1892,  were  not  com- 
menced until  November  5th,  1894.  By  August  of  the  follow- 
ing year,  1,700  men  were  at  work  on  them;  and  the  first  one 
was  blown  in  on  June  8th,  1896.  On  October  /th  the  second 


A     WONDERFUL    RECORD 


181 


furnace  went  into  blast.      In  May,  1897,  a  third  furnace  was 
lighted ;  and  a  fourth  followed  in  June. 

Three  of  these  stacks  are  100  feet  high  by  22  feet  at  the 
bosh.  The  fourth  is  the  same  height  and  a  foot  narrower.  For 
nearly  four  years  they  held  the  world's  record;  as  much  as 
18,809  tons  of  metal  being  produced  by  a  single  furnace  in  a 
month.*  Then  the  broom  of  supremacy,  previously  flaunted  by 


Duquesne  furnaces. 

the  Lucy,  and  then  by  the  Edgar  Thomson  furnaces,  passed  to 
another  Carnegie  stack,  that  known  as  Carrie  No.  3. 

It  is  worthy  of  remark  that  when  the  Duquesne  furnaces 
were  put  in  operation,  with  all  their  labor-saving  appliances, 
they  cut  the  cost  of  labor  per  ton  of  iron  produced  to  one-half 
that  prevailing  elsewhere. 

The  rivalry  started  thirty  years  ago  by  the  Lucy  and  Isabella 
furnaces  still  persists.  Late  in  1901  Carrie  No.  3  made  790 
tons  in  twenty-four  hours.  A  month  or  so  later  furnace  No.  2 
of  the  National  Steel  Company  at  Youngstown,  Ohio,  produced 


*  In  October,  1898,  the  output  of  these  four  furnaces  was  as  follows: 
No.  i 1 8, 672  tons. 

2 17.717       " 

3 18,809     " 

4 ..   18,060     " 


1 82  CAPTURE   OF  DUQUESNE 

806  tons.  This  furnace  is  106^2  feet  high  and  23  feet  in 
diameter.  Later,  furnace  E  at  the  Edgar  Thomson  works  made 
901  gross  tons.  It  is  probable  that  before  these  pages  are  in 
type  some  more  modern  furnace  will  make  a  thousand  tons  in  a 
day.  If  so,  the  difference  between  the  50  tons  that  the  Lucy 
first  made,  and  1,000  tons,  will  mark,  in  a  way  easy  to  under- 
stand, the  progress  in  blast-furnace  construction  and  practice  of 
the  period  covered  by  this  story  and  the  one  group  of  workers 
to  which  it  relates.* 

To  describe  the  further  growth  of  these  works  in  detail 
would  take  more  space  than  is  possible  here.  They  were  Mr. 
Prick's  pride;  and  he  lavished  his  best  thought  upon  them. 
Hardly  a  month  passed  that  did  not  see  some  important  change 
and  addition ;  until  for  economy  of  operation  they  stood  unri- 
valled among  the  steel  works  of  the  world.  Here  are  the  most 
important  items  in  this  record  of  growth  and  improvement : 

1896 — June  ii — Purchase  of  57  acres  of  Hays  estate  adjoining. 

Oct.     9 — Purchase  of  65  acres  from  Oliver  estate,  including  plats 

between  railroad  and  river  ;   price  about  $200,000. 
Nov.  10 — Purchase   of    50  acres  from  Dr.   W.   S.    Huselton   for 

$150,000. 

"         Dec.    19 — Jones  mixer,  200  tons,  put  in  operation  ;    largest  in  the 
country. 

1897 — Feb.     2 — Work  commenced  at  Duquesne  on  Union  Railroad. 
"         May     6 — No.  3  furnace  blown  in. 

"        June  10 — No.  4  furnace  goes  in  blast. 

"         Dec.  19 — Work  started  on  new  billet-mill. 

1898 — June     i — Union  Railroad  completed  and  first  run  of  hot  metal 

from  Duquesne  to  Homestead. 
"        July      8 — New  i6-inch  continuous  mill  put  in  operation. 

July    19 — Union   Railroad  bridge   finished,  connecting  Duquesne 

with  Edgar  Thomson  works. 

"        Aug.     i — Duquesne  tube  works  sold  by  sheriff  for  $141,500  to 
Carnegie  Steel  Company. 


*  At  the  Lucy  furnaces  at  this  date,  1903,  the  present  superintendent,  James 
Scott,  was  employed  at  the  same  plant  soon  after  its  construction,  thirty  years  ago. 
No  man  in  the  Carnegie  Steel  Company,  or  indeed  anywhere  else,  has  been  closer 
to  the  great  changes  described  than  Mr.  Scott,  and  few  men  have  contributed 
more  to  produce  these  changes. 


ANTICS   OF  A    METEOR  183 

1899 — Feb.     7 — Howard    Glass    House    and    27    acres    purchased    for 

$300,000. 

"       Apr.    10 — Coal  dock  on  Monongahela  River  contracted  for. 
' '       Oct.      6 — New  blooming  and  billet  mills  and  open-hearth  plant  to 

cost  $2,500,000  first  publicly  announced. 
"       Nov.  20 — Excavations  for  open-hearth  plant  started. 

1900 — Feb.    1 6 — Plans  for  new  i-j-inch  continuous  billet-mill  announced. 
"       Apr.     5 — Plans  for  new  10-  and  13-inch  double-storage  mill  an- 
nounced. 

"       Oct.      i — Two  new  open-hearth  furnaces  started. 
"       Nov.  27 — 4O-inch  mill  began  operations. 

Dec.    13 — Two  more  open-hearth  furnaces  started. 

1901 — Jan.      2 — Excavations  started  for  new  14-inch  mill. 
"       Feb.     7 — Excavations  for  foundations  of  two  new  merchant  mills. 
"        Mar.    i — Date  of  merger  with  United  States  Steel  Corporation. 

The  present  capacity  of  the  works  is  750,000  tons  of  pig- 
iron  a  year,  and  600,000  tons  of  raw  steel.  The  whole  of  this 
material  can  be  made  into  finished  products  on  the  place.  These 
totals  are  twenty  times  as  great  as  the  first  year's  output  of  the 
Edgar  Thomson  works.  In  view  of  the  short  time  in  which 
these  results  have  been  attained,  the  enthusiasm  of  the  local 
editor  is  pardonable,  even  when — after  comparing  Duquesne  to 
"  the  meteor  that  has  darted  out  of  space  and  cut  a  brilliant 
path  across  the  sky"  yet  "remains  in  the  horizon,  more  lus- 
trous than  ever," — he  calls  it  "the  acknowledged  young  giant 
and  the  mastodon  of  the  unconquered  and  the  unconquerable 
Monongahela  valley."  There  is  certainly  much  in  Duquesne 
to  arouse  local  pride. 


CHAPTER    XIII 
LABOR  CONTESTS  IN  THEORY  AND  PRACTICE 

THE  great  Homestead  strike,  which  forms  the 
most  dramatic  episode  in  the  history  of  all 
the   Carnegie  enterprises,  grew  out  of  con- 
ditions   without  parallel    in    the    industrial 
history  of  this  or  any  other  country.     Su- 
perficially, this  contest  was  a  commonplace 
struggle  between   capital  and  labor  concern- 
ing the  equitable  division   of  the  results  of 
their  J°int  efforts.     But   behind  this  were 
certain  moral  causes,  growing  out  of  the  con- 
I  flict  between  the  idealistic  platform-theories  of  Andrew  Car- 
I  negie  and  the  unsentimental  exigencies  of  business.      A  brief 
i  glance  at  the  attitude  towards  labor  of    Carnegie  the   manu- 
facturer, as  contrasted  with  the  academic  utterances  of  Carnegie 
the  philanthropist,  is  necessary  to  an  understanding  of  the  re- 
moter and  more  obscure  causes  of  this  titanic  struggle,  which, 
marked  as  it  was  with  all  the  ferocity  of  civil  war,  caused -a 
shudder  to  run  through  the  civilized  world.      Incidentally  such 
a  retrospect  will  also  show  that  no  successful  business  can  be 
built    on   philanthropic  aphorisms.     Nor    can    Utopianism  be 
grafted  upon  an  industrial  system  still  rudimentary  in  its  de- 
velopment, without  producing  fruit  of  an  unexpected  and  inju- 
rious variety. 

The  first  strike  in  the  history  of  the  Carnegie  iron  business 
was  that  of  1867,  when,  as  has  been  related,  the  puddlers 
resisted  a  reduction  of  wages.  This  was  ended  by  a  sudden 
boom  in  the  iron  trade  which  called  all  idlers  back  into  the 
shops  at  better  wages  than  before.  The  Carnegies,  however,  in 

184 


PHILANTHROPIC  POSTURING  185 

common  with  other  manufacturers,  had  attempted  to  break  the 
strike  by  the  wholesale  importation  of  foreign  labor.  While  at 
this  time  there  was  no  open  hostility  on  the  part  of  the  manu- 
facturers to  labor-unions  per  sey  there  was  also  no  public  glori- 
fication of  them.  As  for  Carnegie  himself,  his  influence  was 
too  unimportant  to  have  much  effect  on  his  partners ;  but  so 
far  as  is  known,  the  business  man  was  still  dominant  in  the 
dual  personality  which  later  puzzled  partners  and  workmen 
alike  by  an  altruism  never  before  professed  by  any  employer. 

At  the  end  of  1875,  just  after  the  starting  of  the  Edgar 
Thomson  works,  mutterings  of  discontent  were  heard  amongst 
the  men,  and  a  strike  became  imminent.  During  the  few  weeks 
that  the  plant  had  been  in  operation  some  minor  weaknesses 
and  defects  had  shown  themselves  in  the  machinery ;  and,  to 
remedy  these,  the  excuse  offered  by  the  discontent  of  the  men 
was  seized  upon  to  shut  down  the  works.  Stunned  into  sub- 
mission by  the  swiftness  of  the  blow,  the  men  readily  signed 
the  agreement  presented  to  them  by  the  company  before  they 
were  allowed  to  return  to  work;  and  the  lesson  thus  learned 
lasted  long.  Many  years  of  peace  supervened  at  the  Edgar 
Thomson  works.  There  was  still  no  philanthropic  posturing. 
It  was  all  business,  and  very  properly  so. 

In  July,  1884,  the  Carnegies  had  a  strike  at  their  Beaver 
Falls  mill.  This  plant,  known  as  the  Hartman  Steel  Works, 
was  an  unimportant  but  costly  side-issue  growing  out  of  an 
effort  to  find  new  markets  for  raw  steel.  Designed  to  lead  the 
world  in  nails  and  wire  rods,  the  enterprise  was  an  unqualified 
failure  from  the  start ;  and,  except  for  a  brief  period  under  the 
management  of  Mr.  P.  R.  Dillon,  it  remained  so  to  the  end, 
when  it  was  cleverly  sold  by  Mr.  Frick  to  the  Wire  Trust,  and 
closed  and  dismantled.  The  strike  referred  to  was  a  frank  trial 
of  strength  between  the  Carnegies  and  the  Amalgamated  Asso- 
ciation. Andrew  Carnegie  entered  upon  it  with  many  misgiv- 
ings, telling  Hartman,  his  partner,  that  no  one  could  success- 
fully fight  the  Amalgamated  Association  "within  the  smoke  of 


1 86  LABOR    CONTESTS 

Pittsburg. "  Hartman  thought  otherwise;  and,  being  empow- 
ered to  carry  the  fight  to  a  finish,  did  so  in  excellent  style  and 
won  a  complete  victory  over  the  labor  organization.  The  con- 
test had  all  the  usual  features — the  importation  of  workmen 
from  other  districts,  followed  by  rioting  among  the  strikers,  at- 
tacks on  the  "  black  sheep,"  and  the  arrest,  trial,  and  conviction 
of  the  rioters.  There  was  no  display  of  sentimentality  among 

*  the  owners ;  and  the  labor-union  was  temporarily  crushed  out 
of  the  mill. 

The  folly  of  thus  crippling  a  labor  organization  that  gave 
the  Carnegies  an  advantage  in  their  iron  works  over  competitors 
whose  plants  were  less  favorably  located,  was  not  yet  recognized. 
With  the  possible  exception  of  Mr.  Walker,  none  of  the  Carne- 
gie partners  seemed  aware  of  the  economic  principle  underlying 
the  Amalgamated  Association's  requirement  of  uniform  wages 
for  the  same  class  of  work  regardless  of  other  conditions — a 
principle  that  inured  to  the  advantage  of  the  best-equipped  and 
most  favorably  located  plants.  Given  a  uniform  price  of  labor 
throughout  the  country,  the  Pittsburg  iron-mills,  by  reason  of 
their  proximity  to  coal  and  ore,  and  their  unequalled  transporta- 
tion facilities,  possessed  enormous  advantages  over  competitors 
in  other  districts;  and  an  enlightened  business  policy  would 
have  encouraged  any  organization  that,  without  unduly  interfer- 

t  ing  with  the  management,  kept  the  cost  of  labor  down  to  the 
level  of  that  possible  in  the  worst-equipped  and  least  favorably 
situated  works  in  the  country.  Recognition  of  this  principle 
came  later;  and  brought  a  change  in  the  company's  treatment 
of  labor  organizations.  But  unfortunately  the  change  was 

\  credited  to  humanitarian  motives,  instead  of  being  frankly  stated 
as  a  business  principle;  and  there  inevitably  arose  conflicts 
between  the  ideal  and  the  real — between  Andrew  Carnegie's 
philanthropy  and  his  material  interests. 

In  1885  Andrew  Carnegie  made  his  first  public  address, 
and  began  that  series  of  lectures  and  essays  on  the  natural 
rights  of  labor  with  which  his  name  has  since  been  identified. 


"  TRIUMPHANT  DEMOCRACY"  187 

A  year  later  Triumphant  Democracy  was  published.  Ostensu 
bly  a  record  of  the  material  progress  of  the  United  States  dur- 
ing the  preceding  fifty  years,  this  book  was  made  a  vehicle  for 
the  advanced  views  of  Carnegie  on  the  political  and  social 
equality  of  all  men.  It  was  also  a  glorification  of  the  toiler. 
The  book  attained  a  large  circulation,  especially  among  work- 
ingmen,  who  were  enabled  to  buy  it  at  a  nominal  cost  through 
their  labor  organizations. 

In  the  same  year  he  also  published,  in  the  Forum,  an  essay 
on  the  relations  of  capital  and  labor,  in  which  appeared  the 
following  paragraph : 

"  While  public  sentiment  has  rightly  and  unmistakably  con- 
demned violence  even  in  the  form  for  which  there  is  the  most 
excuse,  I  would  have  the  public  give  due  consideration  to  the 
terrible  temptation  to  which  the  workingman  on  a  strike  is 
sometimes  subjected.  To  expect  that  one  dependent  upon  his 
daily  wage  for  the  necessaries  of  life  will  stand  by  peaceably 
and  see  a  new  man  employed  in  his  stead  is  to  expect  much. 
This  poor  man  may  have  a  wife  and  children  dependent  upon 
his  labor.  Whether  medicine  for  a  sick  child,  or  even  nourish- 
ing food  for  a  delicate  wife,  is  procurable,  depends  upon  his 
steady  employment.  In  all  but  a  very  few  departments  of  labor 
it  is  unnecessary  and  I  think  improper  to  subject  men  to  such 
an  ordeal.  In  the  case  of  railways  and  a  few  other  employments 
it  is,  of  course,  essential  for  the  public  wants  that  no  interrup- 
tion occur,  and  in  such  case  substitutes  must  be  employed;  but 
the  employer  of  labor  will  find  it  much  more  to  his  interest, 
wherever  possible,  to  allow  his  works  to  remain  idle  and  await 
the  result  of  a  dispute  than  to  employ  a  class  of  men  that  can 
be  induced  to  take  the  place  of  other  men  who  have  stopped 
work.  Neither  the  best  men  as  men,  nor  the  best  men  as 
workers,  are  thus  to  be  obtained.  There  is  an  unwritten  law 
among  the  best  workmen:  'Thou  shalt  not  take  thy  neighbor's 
job.'  ' 

Lofty  in  spirit  and  purpose  as  this  essay  was,  its  humani- 
tarian intent  was  grossly  perverted  by  the  labor  agitator;  and 
its  broad  and  liberal  principles  were  garbled  so  as  to  seem  an 
authoritative  excuse  for  violence.  Unfortunately  for  the  work- 


1 88  LABOR    CONTESTS 

men  of  Braddock  and  Homestead,  they  mistook  these  high  phil- 
anthropic views  for  the  serious  designs  of  their  employer  towards 
themselves;  and  this  misunderstanding  was  intensified  by  Car- 
negie's method  of  ending  the  coke  strike,  mentioned  later,  and 
also  by  an  incident  which  happened  about  this  time  at  Braddock. 
This  was  somewhat  as  follows : 

On  account  of  some  grievance  the  women  employed  in  the 
Pittsburg  laundries  refused  to  work,  and  enlisted  the  aid  of  the 
Knights  of  Labor  to  keep  other  women  from  taking  their  places. 
The  Knights  of  Labor  went  to  Captain  Jones  and  demanded 
the  discharge  of  an  old  Carnegie  employee,  whose  two  daugh- 
ters were  working  in  one  of  the  proscribed  laundries.  Jones 
refused  in  that  sonorous  language  with  which  he  was  so  highly 
gifted.  The  matter  was  thereupon  taken  direct  to  Mr.  Carne- 
gie, who  ordered  the  man's  dismissal,  with  the  remark,  "  We 
cannot  afford  a  strike  for  a  principle. "  At  the  same  time  he 
ordered  the  old  man's  wages  to  be  continued  for  a  couple  of 
months.  Strange  to  say,  the  sturdy  old  fellow  refused  them. 

No  one  was  more  surprised  at  this  compliance  with  their 
demand  than  the  Knights  of  Labor  themselves ;  and  its  effect 
on  this  dictatorial  organization  was  most  disastrous  for  the  Car- 
Regies.  Within  a  little  while  they  had  a  strike  of  their  own  as 
a  result  of  the  meddling  of  the  leaders  of  this  most  offensive  of 
all  labor-unions. 

In  Captain  Jones'  statement  of  the  causes  of  the  great  out- 
put of  the  Edgar  Thomson  works,  quoted  in  a  previous  chapter, 
he  says : 

"  I  soon  discovered  it  was  entirely  out  of  the  question  to 
expect  human  flesh  and  blood  to  labor  incessantly  for  twelve 
hours,  and  therefore  it  was  decided  to  put  on  three  turns,  reduc- 
ing the  hours  of  labor  to  eight." 

He  adds  that 

"this  proved  to  be  of  immense  advantage  to  both  the  company 
and  the  workmen,  the  latter  now  earning  more  in  eight  hours 


ANDREW  CARNEGIE'S  PINKERTONS         189 

than  they  formerly  did  in  twelve  hours,  while  the  men  can  work 
harder  constantly  for  eight  hours,  having  sixteen  hours  for  rest." 


Jones'  praiseworthy  effort  to  amend  the  lot  of  the  laborer  was 
afterwards  found  to  put  the  Edgar  Thomson  works  at  a  disad- 
vantage with  competing  establishments  where  two  twelve-hour 
turns  were  the  rule;  and  an  effort  was  made  in  1887  to  induce 
the  Edgar  Thomson  men  to  return  to  the  old  system.  At  the 
same  time  a  sliding  scale  of  wages  was  proposed,  similar  to 
that  which  had  been  found  successful  in  the  North  Chicago 
rolling-mill  and  in  the  Crescent  Steel  Works  at  Pittsburg.  The 
men  were  willing  to  accept  the  sliding  scale ;  but  they  were 
unwilling  to  return  to  the  twelve-hour  system.  The  usual 
strike  resulted ;  but  before  it  had  gone  far  a  committee  of  the 
strikers  went  to  see  Mr.  Carnegie  at  the  Windsor  Hotel,  New 
York.  There  he  reasoned  with  them,  and  talked  them  into  a 
conciliatory  frame  of  mind;  and  they  agreed  to  sign  the  con- 
tract he  put  before  them.  The  affair  seemed  to  have  reached  a 
happy  conclusion ;  and  the  labor  leaders  left  for  Pittsburg  in 
the  best  of  spirits.  As  Mr.  Carnegie  bade  them  good-bye,  he 
pressed  into  the  hands  of  each  a  copy  of  his  Forum  essay.  This 
the  men  read  on  the  train ;  and  on  their  arrival  at  Braddock 
they  promptly  repudiated  the  agreement  they  had  signed  and 
continued  the  strike. 

Mr.  Carnegie  made  no  effort  to  conceal  his  disappointment 
and  chagrin.  Summoning  Captain  Jones  to  New  York,  a  brief 
conference  was  held  at  the  Windsor;  and  from  there  Jones 
went  over  to  Philadelphia  and  engaged  a  little  army  of  Pinker- 
ton  guards  for  service  at  Braddock.  Then  Mr.  Carnegie  retired 
to  Atlantic  City,  where  he  was  kept  posted  as  to  the  current  of 
events  by  his  cousin,  George  Lauder. 

Under  the  protection  of  Pinkerton  guards  the  works  were 
now  put  in  operation  by  non-union  men.  The  usual  disorders 
took  place,  resulting  in  a  slight  loss  of  life ;  but  eventually  the 
contest  was  won  by  the  company.  The  struggle  lasted  from. 


1 9o  LABOR    CONTESTS 

December,  1887,  till  May,  1888.  Thus  ended  the  eight-hour 
day  in  a  night  of  sorrow  and  suffering. 

Unfortunately  the  effect  of  this  incident  did  not  end  with 
the  strike.  It  is  being  used  in  1903  as  an  argument  against 
the  compulsory  eight-hour  day  which  Congress  is  now  consid- 
ering; so  that  this  great  step  in  the  elevation  of  the  laborer 
will  probably  be  delayed  by  Jones'  unlucky  experiment. 

Andrew  Carnegie's  later  opinion  of  the  Knights  of  Labor, 
whom  he  blamed  for  the  untoward  result  of  his  efforts  at 
conciliation,  was  not  very  high.  When  asked  by  an  English 
reporter  if  we  have  not  such  an  organization  in  America  as  the 
Knights  of  Labor,  he  replied  with  emphasis : 

"  Say  rather  we  had.  It  was  one  of  those  ephemeral  organi- 
zations that  go  up  like  a  rocket  and  come  down  like  a  stick. 
It  was  founded  upon  false  principles,  viz.,  that  they  could  com- 
bine common  or  unskilled  labor  with  skilled." 

The  coke  strike^  to  which  reference  has  been  made,  also 
took  place  in  1887.  This  at  first  was  a  matter  of  wages  pure 
and  simple;  but,  as  in  so  many  contests  between  master  and 
workmen,  higher  considerations  were  soon  involved. 

As  has  been  related,  the  Carnegies  bought  a  large  interest 
in  the  H.  C.  Frick  Coke  Company  in  1882.  In  1886,  by  the 
withdrawal  of  two  of  Mr.  Prick's  earlier  associates,  this  interest 
was  largely  increased ;  and  the  Carnegies  acquired  a  majority 
of  the  coke  company's  stock.  For  the  regulation  of  output  and 
to  control  competition,  the  coke  operators  of  the  Connellsville 
region  had  some  sort  of  a  gentlemen's  agreement;  and  when,  in 
1887,  trouble  concerning  wages  arose,  these  owners  acted  in 
unison,  and  all  conferences  with  the  workmen's  unions  were 
conducted  by  a  joint  committee.  By  agreement  with  the  trades- 
unions — the  Knights  of  Labor  and  the  Miners'  and  Mine 
Laborers'  Amalgamated  Association — the  matters  in  dispute 
were  submitted  to  arbitration.  The  Board  of  Arbitration  con- 
sisted of  two  members  appointed  by  the  manufacturers,  two  by 


BAD   FAITH  ALLEGED  191 

the  labor-unions,  and  these  four  elected  a  fifth,  who  was  to 
serve  as  umpire  in  qase  of  a  failure  of  the  whole  board  to  reach 
an  understanding.  This  contingency  arising,  the  decision  was 
left  to  the  umpire ;  and  his  award,  when  issued,  was  unfavor- 
able to  the  men.  Thereupon  a  strange  condition  arose.  The 
main  bodies  of  the  labor-unions  accepted  the  umpire's  judgment, 
as  in  good  faith  they  were  required  to  do ;  but  the  local  lodges 
denounced  it  as  "unjust  and  unwarranted,"  and  refused  to  be 
bound  by  it.  A  strike  ensued,  which  the  Knights  of  Labor 
called  illegal;  and,  as  if  to  further  justify  the  characterization, 
the  men  resorted  to  all  the  old-time  acts  of  violence.  Men  who 
were  willing  to  work  were  maltreated  and  shot;  dynamite  was 
used  to  blow  up  the  mines ;  machinery  was  destroyed,  and  thou- 
sands of  tons  of  coke  were  allowed  to  spoil  in  the  ovens. 

It  was  at  this  stage  that  Carnegie  cabled  from  Scotland  a 
positive  order  to  accede  to  the  strikers'  demands ;  and,  as  he 
and  his  partners  controlled  the  Frick  Coke  Company,  the  order 
was  carried  out  regardless  of  outstanding  obligations  to  the 
other  manufacturers.  Naturally  the  defection  of  the  most  im- 
portant member  of  the  group  excited  in  the  rest  the  bitterest  of 
feelings ;  and  Mr.  Frick  promptly  resigned  the  presidency  of 
the  company  which  bore  his  name  but  which  he  no  longer  con- 
trolled. The  rest  of  the  manufacturers  set  their  teeth  and 
continued  the  struggle  ;  and,  to  the  surprise  of  everybody,  finally 
gained  a  complete  victory  over  their  men. 

The  apparent  act  of  bad  faith  on  the  part  of  the  Carnegies 
received  universal  condemnation.  It  was  ranked  above  that  of 
the  strikers  who  had  repudiated  the  decision  of  their  umpire. 
The  breaking  up  of  the  combination  was  also  deplored  because 
it  involved  demoralization  of  prices  on  which  the  wages  ulti- 
mately depended ;  so  that  in  the  long  run  the  workmen  would 
suffer  by  the  act.  But  those  who  made  these  criticisms  did  not 
consider  the  risk  which  the  Carnegies  ran  in  banking  up  their 
blast-furnaces.  The  best  furnace  will  not  stand  banking  for 
more  than  three  months ;  and  during  this  time  there  is  always 


1 92  LABOR    CONTESTS 

a  danger  of  its  becoming  chilled.  When  this  happens  it  has  to 
be  blown  out,  and  partially  if  not  wholly  relined  at  a  cost  of  at 
least  $35,000.  At  this  date  the  Carnegies  had  seven  furnaces 
banked;  so  that  there  was  almost  a  quarter  of  a  million  dollars 
in  hourly  peril.  In  addition,  there  was  a  positive  loss  amount- 
ing to  many  thousands  of  dollars  daily  through  the  stoppage  of 
iron  production,  and  further  losses  in  the  steel-mill  through  lack 
of  material.  On  the  other  hand,  the  advantage  which  the  Car- 
negies would  have  over  competing  iron  manufacturers  by  get- 
ting a  regular  supply  of  coke  and  continuing  work  while  all 
others  were  idle,  was  one  almost  beyond  compute.  While  this 
alone  might  not  tempt  the  average  manufacturer  to  a  breach  of 
faith,  it  would  do  much  to  console  him  for  it  if  other  conditions 
produced  it. 

Of  course  the  workmen  were  not  informed  as  to  all  the 
reasons  which  prompted  the  Carnegies  to  yield  to  their  de- 
mands ;  and  they  not  unnaturally  supposed  that  their  victory  was 
due,  in  some  mysterious  way,  to  the  inalienable  rights  of  labor 
and  all  the  other  pretty  texts  with  which  they  had  become 
familiar.  There  is  no  doubt  that  this  misunderstanding  gave 
rise  to  the  frightful  disorders  that  ensued,  three  or  four  years 
later,  in  the  same  region. 

The  settlement  just  narrated  was  made  in  July,  1887.  From 
that  time  until  early  in  1890  the  H.  C.  Frick  Coke  Company 
paid  twelve  and  one-half  per  cent,  more  for  labor  than  did  other 
operators.  In  February,  1890,  however,  a  general  scale  was 
agreed  upon  covering  wages  in  the  Connellsville  region  under 
which  all  operators  paid  the  same  rate.  This  scale  expired  a 
year  later;  and  the  men  refused  to  sign  the  new  one  designed 
in  continuation  of  it.  After  repeated  conferences,  at  which  no 
agreement  was  reached,  an  effort  was  made  to  start  the  mines 
and  ovens  with  new  workmen.  For  three  months  the  whole 
region  was  given  over  to  rioting,  arson,  and  murder.  Armed 
mobs  attacked  the  mines  and  coking  plants,  killing  and  maim- 
ing the  workers,  destroying  the  machinery,  and  defying  the 


ETIQUETTE   FOR    STRIKERS  193 

county  officials  who  sought  to  bring  order  out  of  the  industrial 
chaos.  Gangs  of  men  marched  through  the  night  terrorizing 
the  peaceful  members  of  the  community;  and  when  deputy 
sheriffs  attempted  to  arrest  them,  the  strikers  assumed  military 
formations  and  shot  their  pursuers  at  sight.  One  such  body 
marched  across  a  large  extent  of  the  country,  occasionally 
brought  to  bay,  when  battle  was  given  and  taken  with  all  the 
tactics  of  irregular  warfare.  In  this  guerilla-like  march  and 
pursuit  eight  of  the  strikers  were  killed  and  many  more  were 
seriously  wounded.  As  the  Carnegies  had  a  fair  supply  of  coke 
on  hand  at  the  outbreak  of  hostilities,  and  as  the  prices  of  steel 
and  rails  were  low,  the  war  was  fought  to  the  bitter  end. 
Eventually  the  rioters  were  caught  or  driven  out  of  the  region, 
and  others  willing  to  accept  the  wages  they  refused  received 
adequate  protection. 

A  year  after  the  establishment  of  peace  came  the  Home- 
stead strike.  In  the  mean  time,  however,  Mr.  Carnegie's  Fonim 
essay,  in  the  hands  of  undiscriminating  workmen,  had  become 
a  veritable  manual  of  etiquette  for  strikers.  The  last  quoted 
sentence,  the  Carnegie  contribution  to  the  decalogue,  became 
in  its  terse  and  picturesque  vigor,  the  most  understandable  of 
all  the  tenets  of  "the  little  boss;  "  and  there  was  no  Slav  nor 
Hungarian  at  Connellsville  and  Homestead  so  mean  of  intellect 
as  not  to  realize  its  full  purport.  As  for  the  Knights  of  Labor, 
over  whom  Mr.  Carnegie  had  pronounced  so  slighting  a  funeral 
oration,  they  sprang  to  a  joyful  resurrection  with  this  text  as 
their  watchword  :  "Thou  shalt  not  take  thy  neighbor's  job." 

Before  proceeding  to  a  review  of  the  immediate  causes  of 
the  greatest  of  all  the  Carnegie  struggles  with  labor,  it  is  fit- 
ting that  a  glance  should  be  given  at  the  material  conditions 
surrounding  the  workmen  at  Homestead.  To  this  end  may  be 
quoted  the  sympathetic  summary  of  a  description  of  the  men  at 
work  which  is  published  in  Bernard  Alderson's  biography  of 
Mr.  Carnegie  under  the  latter's  own  supervision : 


194 


LABOR    CONTESTS 


"Thus  far,"  says  Mr.  Alderson,  "we  have  studied  Mr.  Car- 
negie in  theory.  Now  let  us  see  how  he  has  put  all  these  ad- 
mirable sentiments  and  unimpeachable  principles  into  practice. 
The  best  test  that  can  be  applied  is  the  condition  of  labor  sur- 
rounding his  own  workmen.  Mr.  Hamlin  Garland,  a  well- 
known  writer,  though  having  no  technical  experience,  describes 
the  impressions  he  received  from  a  visit  to  the  Homestead 
works.  His  training  as  a  novelist  naturally  impelled  him 

to  look  at  things  from 
the  descriptive  writer's 
point  of  view,  and  not 
become  interested  in  the 
picturesque,  both  horri- 
ble and  attractive.  In 
his  approach  to  Home- 
stead Mr.  Garland  was 
struck  by  the  desolate 
appearance  of  the  dis- 
trict, and  the  wretched- 
ness of  the  town  itself, 
he  says,  was  deplorable. 
'The  streets  were  hor- 
rible; the  buildings 
were  poor;  the  side- 
walks were  sunken  and 
full  of  holes;  and  the 
crossings  were  formed 
of  sharp-edged  stones 
like  rocks  in  a  river- 
bed. Everywhere  the 
yellow  mud  of  the 
streets  lay  kneaded  into 
sticky  masses,  through 
which  groups  of  pale, 
lean  men  slouched  in 
faded  garments,  grimy  with  the  soot  and  dirt  of  the  mills. 
The  town  was  as  squalid  as  could  well  be  imagined,  and  the 
people  were  mainly  of  the  discouraged  and  sullen  type  to  be 
found  everywhere  where  labor  passes  into  the  brutalizing  stage 
of  severity. ' 

These  depressing  conditions  are  apparently  inseparable  from 
a  newly  established  iron  or  steel  mill  in  any  locality,  and  this 
is  especially  true  where  soft  coal  is  used.  Grime,  heat,  hard, 
exhausting  labor,  these  are  conditions  that  are  to  be  found  in 


Copyright  by  S.  S.  McClure  Co. 

'Looks  like  hard  work." 


"A    DOG'S  LIFE"  195 

every  steel-mill,  and  the  works  of  the  Carnegie  Company  differed 
little  from  other  manufactories  of  the  same  kind  except  in  ex- 
tent, but  it  may  be  truly  said  that  the  larger  the  mill  the  more 
depressing  the  conditions. 

After  commenting  on  the  muggy,  smoke-laden  atmosphere, 
he  [Garland]  proceeds  to  describe  the  conditions  inside  the 
mills,  and  the  men  engaged  at  their  tasks,  and  tells  us  that  they 
worked  with  a  sort  of  desperate  attention  and  alertness. 

'That  looks  like  hard  work/  I  said  to  one  of  them  to  whom 
my  companion  introduced  me.  He  was  breathing  hard  from 
his  labor. 

'Hard!  I  guess  it's  hard.  I  lost  forty  pounds  the  first 
three  months  I  came  into  the  business.  It  sweats  the  life  out 
of  a  man.  I  often  drink  two  buckets  of  water  in  twelve  hours ; 
the  sweat  drips  through  my  sleeves  and  runs  down  my  legs  and 
fills  my  shoes.' 

'But  that  isn't  the  worst  of  it,  said  my  guide,  a  former 
employee.  'It's  a  dog's  life.  Now  those  men  work  twelve 
hours,  and  sleep  and  eat  out  ten  more.  You  can  see  a  man 
don't  have  much  time  for  anything  else.  You  can't  see  your 
friends  or  do  anything  but  work.  That's  why  I  got  out  of  it. 
I  used  to  come  home  so  exhausted,  staggering  like  a  man  with 
a  jag!" 

With  this  picture  in  mind  it  is  worth  while  to  quote  from 
Mr.  Alderson's  preceding  page  a  characteristic  phrase  from 
Andrew  Carnegie : 

"  The  lot  of  a  skilled  workman,"  he  says,  "  is  far  better  than 
that  of  the  heir  to  an  hereditary  title,  who  is  very  likely  to  lead 
an  unhappy,  wicked  life." 

Little  wonder  that  the  skilled  workman,  with  the  sweat 
dripping  through  his  sleeves  and  running  down  his  legs  and 
filling  his  shoes,  failed  to  understand  the  man  in  whose  inter- 
est he  was  making  such  terrific  exertions.  "  Kind  master,"  he 
cabled  during  the  strike,  "  tell  us  what  you  want  us  to  do  and 
we  will  do  it !  " 

"  Again  and  again  he  [Hamlin  Garland]  is  impressed, "  con- 
tinues Mr.  Alderson,  "  with  the  general  appearance  of  exhaus- 
tion that  is  shown  in  the  haggard  faces  of  the  toilers,  and  he 
says  'their  work  is  of  the  sort  that  hardens  and  coarsens.' 


196 


LABOR    COXTESTS 


Everywhere  in  the  enormous  sheds  were  pits  gaping  like  the 
mouth  of  hell,  and  ovens  emitting  a  terrible  degree  of  heat,  with 
grimy  men  filling  and  lining  them.  One  man  jumps  down, 
works  desperately  for  a  few  minutes,  and  is  then  pulled  up.  ex- 
hausted. Another  im- 
mediately takes  his  place ; 
there  is  no  hesitation. 
When  he  spoke  to  the 
men  they  laughed.  It 
.vinter  when  he  made 
his  visit.  They  told  him 
to  come  in  the  summer, 
during  July,  when  one 
could  scarcely  breathe. 
An  old  workman,  relat- 
ing the  experience  of  his 
first  day's  toil,  says  he  ap- 
plied for  work,  and  the  su- 
perintendent, saying  he 
looked  strong  and  tough, 
set  him  on  the  pit  work. 
For  the  first  time  in  his 
life  he  fainted  repeatedly, 
and  when  he  left  at  night 
he  could  scarcely  drag 
himself  home. 

They  take  great  risks, 
too;  and  the  injuries  sustained  are  of  a  most  frightful  char- 
acter. An  explosion  in  the  pouring  of  the  molten  metal,  and 
half-a-dozen  men  are  terribly  mangled  and  one  or  two  killed. 
Such  incidents  are  not  infrequent.  The  continuous  dread  of 
an  accident,  combined  with  the  intense  drive  of  the  work, 
constitute  a  fearful  strain.  This  is  a  fearful  picture,  painted 
in  the  darkest,  most  repulsive  colors,  but  this  is  but  one 
side  of  it.  Nothing  is  said  of  the  comfortable  homes  which 
steady  employment  at  from  four  to  ten  dollars  a  day  enable 
the  steady,  sober  workman  to  maintain — the  self-confidence 
that  continuous  employment  begets.  The  environments  of 
the  mills  were  improved  as  rapidly  as  possible,  streets  were 
paved,  schools  were  established,  and  public  institutions  of 
various  kinds  were  initiated.  Several  free  educational  institu- 
tions-were founded  by  Mr.  Carnegie  in  an  attempt  to  help  his 
workmen  help  themselves.  The  other  side  of  the  picture  is 
full  of  light  and  hope,  though  there  are  many  exceptions. 


Copyright  b\  S.  S.  HcClure  Co. 

Preferable  to  a  peerage. 


DANTE  S  INFERNO 


197 


;y  of  the  men  have  happy  families,  and  those  of  the  better 
class  are  very  well  off.  The  company  houses  are  very  good, 
and  have  all  modern  conveniences,  and  the  men  who  are  sober 
and  care  for  their  families,  besides  being  prosperous  live 
comfortably. 

The  effect  of  the  work  on  these  men  was  brought  out  in 
a  conversation  which  Mr.  Garland  had  the  morning  after  his 
visit  to  the  mills.     'The  worst  part  of  the  whole  business,'  said 
the  workman,  'is,  it  brutalizes  a  man.     You  can't  help  it.     You 
start  to  be  a  man,  but  you  become  more  and  more  a  machine, 
and  pleasures  are  few  and  far  between.     It's  like  any  severe 
labor;  it  drags  you  down  mentally  and  morally  just  as  it  d<x 
physically.      I  wouldn't  mind  it  so  much  but  for  the  long  hour 
Twelve  hours  is  too  long. ! ' 

Allowing  for  a  certain  journalistic  exaggeration  this  lurid 
picture  is  a  fairly  truthful  one.  But  in  the  glare  of  furnace 
fires  shadows  loom  big  and  black;  and  these  have  caught  the 
journalist's  attention.  The  fierce  heat,  the  ruddy  light,  the 

tense,  stripped  figures 
of  the  workers,  in- 
evitably suggest 
Dante's  Inferno;  and 
thoughts  of  bodily 
suffering  and  mental 
anguish  come  to  the 
onlooker  in  the  nat- 
ural sequence  of  asso- 
ciated ideas.  Greater 
familiarity  with  the 
processes  of  open- 
hearth  steel-making 
would  have  given  Mr. 

Garland  the  means  of  distinguishing  subjective  impressions 
from  outside  facts.  If  a  furnace  man  drinks  two  buckets  of 
water  in  twelve  hours,  the  sweat  will  run  down  his  legs  and  into 
his  shoes ;  and  while  his  condition  may  not  be  preferable  to  that 
of  an  heir  to  a  peerage,  it  may  yet  be  free  from  bodily  suffering. 


'More  and  more  a  machine." 


I98 


LABOR    CONTESTS 


It  is,  however,  this  peerage  idea  and  others  akin  to  it  which, 
coming  with  all  the  glamour  of  the  Carnegie  name  into  such 
works  as  those  just  described,  wrought  trouble  for  the  managers, 
and  did  more  than  any  one  thing  to  make  the  men  obstinate 
and  unreasonable.  The  man  who  climbs  down  into  the  pit  to 
break  up  the  red-hot  slag  is  not  himself  an  idealist,  nor  has  he 
the  mental  equipment  to  make  necessary  allowances  for  the 

enthusiastic     ideal- 
ism of  another.      In 
his    hands     Trium- 
phant Democracy  be- 
came not  the  gospel 
of  a  universal  eman- 
cipation it   was    in- 
tended to  be,  but  a 
special    message    of 
independence    from 
his   master   to  him- 
self.  The  exaltation 
of     labor    turned     the 
laborer's  head  ;   and  he 
gravely    accepted    the 
tributes  to  his   superi- 
ority   with   which    the 
mere      capitalist      en- 
dowed him.     This  was  shown  a  hundred 
times  during    the   strike,   when   the   men 

thought  that  all  they  had  to  do  was  to  let  Andrew  Carnegie  in 
Scotland  know  what  his  wicked  managers  at  Homestead  were 
doing,  for  him  to  order  its  discontinuance  by  cable. 

Concerning  the  difficulties  under  which  the  Board  of  Mana- 
gers constantly  labored  through  this  tendency  of  their  chief  to 
talk  for  publication,  Mr.  Lauder,  his  cousin,  relates  how  he 
once  told  the  following  parable  to  Mr.  Carnegie.  It  is  more 
grewsome  than  funny,  but  it  has  a  moral. 


'Not  an  idealist.' 


LAUDER'S    GREWSOME   STORY  199 

Once  upon  a  time  a  man  collided  with  a  street  car.  The 
remains  were  collected  and  built  up  into  some  human  sem- 
blance, and  placed  on  view  in  the  undertaker's  for  identifica- 
tion. After  a  while  a  lady  drove  up  and  claimed  the  corpse  as 
that  of  her  husband ;  and  she  ordered  the  handsomest  funeral 
that  money  could  buy,  with  flowers,  plumes,  and  every  costly 
accessory  to  mourning.  As  she  was  about  to  leave  the  estab- 
lishment, the  undertaker's  assistant,  in  hastening  to  open  the 
door  for  her  to  pass,  gave  a  jar  to  the  slab  on  which  the  de- 
ceased reposed;  and  the  dead  man's  jaw  fell  open,  revealing  a 
golden  tooth.  At  sight  of  this  the  lady  hurriedly  counter- 
manded the  orders  she  had  given  for  the  imposing  obsequies, 
saying  that  she  saw  by  the  golden  tooth  that  she  had  made  a  mis- 
take and  that  it  was  not  her  husband  after  all.  As  she  passed 
out  of  the  door,  the  disappointed  undertaker  turned  and  apostro- 
phized the  deceased.  "  What  kind  of  an  idiot  are  you  anyway? 
If  you'd  only  known  enough  to  keep  your  mouth  shut — !  " 

Mr.  Carnegie,  who  tells  so  many  stories  on  others,  laughed 
heartily  and  promised  to  moderate  his  speech-making. 

Coming  now  to  the  more  immediate  causes  of  the  great  strike 
of  1892,  mention  should  be  made  of  the  difficulties  which  pre- 
ceded it  in  1889,  when  the  sliding  scale  of  wages  first  went  into 
effect  at  Homestead. 

Up  to  the  summer  of  1889,  the  wages  of  workers  making 
merchant  steel,  or  steel  to  take  the  place  of  merchant  iron,  had 
not  been  put  upon  a  settled  basis.  At  first  the  work  was  done 
in  iron-mills ;  and  after  some  discussion  the  same  wages  were 
paid  as  were  given  for  working  iron.  With  the  building  of 
mills  especially  to  work  Bessemer  and  open-hearth  steel  into 
merchant  sizes  and  shapes,  and  with  their  improved  machinery 
and  appliances,  the  output  per  worker  was  very  largely  in- 
creased ;  and  as  the  wages  were  based  on  tonnage,  earnings  had 
grown  beyond  all  reason.  Rollers  and  heaters,  for  instance, 
were  earning  from  five  to  ten  times  as  much  as  the  skilled 


200  LABOR    CONTESTS 

mechanics  who  had  erected  the  machinery  on  which  the  former 
worked.  A  general  reduction  amounting  to  about  twenty-five 
per  cent,  was  therefore  proposed  by  the  firm;  and  a  sugges- 
tion was  made  for  the  automatic  regulation  of  future  wages  by  a 
scale  which  should  follow,  from  month  to  month,  the  movements 
of  the  prices  received  by  the  firm  for  raw  steel.  This  was 
naturally  resisted  by  the  tonnage  men ;  and  both  sides  prepared 
for  the  struggle  which  seemed  unavoidable. 

On  the  Carnegies'  side  these  preparations  took  on  some- 
what of  an  opera-bouffe  character.  Detectives  in  greasy  caps 
and  smutty  clothes  were  sent  into  the  local  stores  and  saloons, 

where  they  sat  on  barrels  or 
stood  at  bars  listening  to 
the  workmen's  talk.  They 
K  m^  sought  lodgings  in  the  town, 

and  talked  with  wives  and 
mothers ;  and  the  gossip 
thus  picked  up  was  sent  to 
New  York,  where  Andrew 
Carnegie  read  it  surrounded 
by  the  humanitarian  texts 
and  quaint  heraldic  devices 

A  detective. 

in  honor  of  the  toiler  with 

which  he  had  covered  his  library  walls.  Then  he  planned  a 
strenuous  campaign  for  his  partners,  and  went  to  Scotland. 

The  result  was  very  much  as  if  Napoleon  had  attempted 
the  conquest  of  the  Rhine  provinces  from  Josephine's  bower  in 
the  Tuileries.  A  hundred  or  more  deputy  sheriffs,  picked  off 
the  streets  of  Pittsburg,  went  up  to  Homestead,  where  they 
were  met  by  the  strikers,  relieved  of  their  maces,  caps,  and  coats, 
and  sent  back  home.  And  this  was  the  comedy  out  of  which 
grew  the  tragedy  of  Homestead. 

Henry  Clay  Frick  was  not  yet  in  full  control ;  and  the  work- 
men interpreted  the  weakness  and  vacillation  of  the  company 
as  fresh  expressions  of  the  benevolent  theories  of  "  the  little 


DEPUTY  SHERIFFS  ROUTED  201 

boss."  The  discomfiture  of  the  deputy  sheriffs  was  followed 
by  a  conference  with  the  leaders  of  the  strikers'  union,  the 
Amalgamated  Association  of  Iron  and  Steel  Workers  of  the 
United  States,  and  again  the  firm  received  a  defeat.  Mr. 
Abbot,  who  conducted  the  negotiations  for  the  Carnegies,  pro- 
claimed that  "  both  sides  are  victors,  and  both  sides  are  proba- 
bly vanquished  in  minute  details."  The  principle  of  the  sliding 
scale  was  accepted  by  the  men ;  but  instead  of  a  monthly  adjust- 
ment of  prices,  as  the  Carnegies  first  demanded,  the  rate  was 
fixed  for  six  months,  and  "  the  average  price  of  said  six  months 
shall  be  the  basis  upon  which  wages  shall  be  paid  for  the  next 
three  months,  the  rate  to  change  every  three  months  thereafter 
based  upon  the  average  price  of  the  preceding  three  months." 
This  excellent  rule  was  nullified  by  numerous  exceptions,  which 
led  to  constant  bickerings  and  disputes  for  the  next  three  years. 
In  many  departments  the  rate  of  payment  was  left  unchanged 
—with  more  exceptions.  These  exceptions,  in  the  form  of 
foot-notes,  were  more  numerous  in  the  agreement  than  the 
rules  they  were  designed  to  elucidate.  The  old  force  of  men 
was  retained ;  but  where  places  could  be  found  for  any  of  the 
newcomers  no  objection  was  to  be  made  to  them. 

The  organ  of  the  labor-unions,  commenting  on  this  settle- 
ment, remarked  that  the  Amalgamated  Association  now  "  stands 
head  and  shoulders  higher  than  ever  before,  for  it  comes  out  of 
one  of  the  most  difficult  crises  in  its  history  intact,  with  honor 
and  with  the  renewed  confidence  of  the  public.  It  is  a  victory 
to  the  association,  for  thoroughly  prepared  as  that  body  was  to 
pursue  the  contention  to  the  bitter  end,  yet  in  the  midst  of  hours 
when  minds  were  naturally  inflamed  conciliation  prevailed,  and 
the  strength  and  usefulness  of  organization  were  demonstrated. 
It  is  a  victory  for  the  firm  in  that  the  management  displayed 
reason,  substituting  as  they  did  concession  for  the  'ultimatum.'  ' 

And  verily  the  "  concession  "  thus  substituted  was  far-reach- 
ing beyond  anything  ever  dreamed  of  by  the  management. 
Every  department  and  sub-department  had  its  workmen's  "  com- 


202  LABOR    CONTESTS 

mittee,"  with  a  "  chairman "  and  full  corps  of  officers,  who, 
fearing  that  their  authority  might  decay  through  disuse,  were 
ever  on  the  alert  to  exercise  it.  During  the  ensuing  three 
years  hardly  a  day  passed  that  a  "  committee  "  did  not  come  for- 
ward with  some  demand  or  grievance.  If  a  man  with  a  desira- 
ble job  died  or  left  the  works,  his  position  could  not  be  filled 
without  the  consent  and  approval  of  an  Amalgamated  commit- 
tee. Usually  this  committee  had  a  man  in  waiting  for  it ;  and 
the  firm  dared  not  give  it  to  any  one  else.  The_rjieth0d-4^ap- 
portioning  the  work,  of  regulating  the  turns,  of  altering  the  ma- 
chinery, in  short,  every  detail  of  working  the  great  plant,  was 
subject  to  the  interference  of  somje  busybody  representing  the 
Amalgamated  Association.  Some  of  this  meddling  was  special 
under  the  agreement  that  had  been  signed  by  the  Carnegies, 
but  much  of  it  was  not;  it  was  only  in  line  with  the  general 
policy  of  the  union.  This  is  shown  by  the  constitution  of  the 
Amalgamated  Association,  in  which,  to  take  an  instance  from 
its  rules  for  puddling-mills,  it  was  provided  that  "when  a  va- 
cancy occurs  in  the  boiling  department  the  oldest  boiler,  if  he 
so  desires,  shall  have  the  preference  of  the  furnace  so  vacated." 
The  heats  of  a  turn  were  designated,  as  were  the  weights  of  the 
various  charges  constituting  a  heat.  The  product  per  worker 
was  limited;  the  proportion  of  scrap  that  might  be  used  in 
running  a  furnace  was  fixed;  the  quality  of  pig-iron  was  stated; 
the  puddlers'  use  of  brick  and  fire  clay  was  forbidden,  with  ex- 
ceptions ;  the  labor  of  assistants  was  defined ;  the  teaching  of 
other  workmen  was  prohibited;  nor  might  one  man  lend  his 
tools  to  another  except  as  provided  for.  And  under  similar 
irksome  regulations  the  Carnegie  managers  conducted  their 
business  for  three  years,  losing  money  on  almost  every  ton  of 
ingots,  blooms,  and  billets  turned  out.  During  this  time  some 
of  the  men  earned  from  $12  to  $15  a  day;  and  Homestead  be- 
came familiar  with  the  sight  of  steel-workers  being  driven  to 
the  mill  in  their  carriages.  Thus  did  their  lot  become  compa- 
rable to  that  of  an  heir  to  the  peerage. 


CHAPTER    XIV 


Strikers  arresting  a  news- 
paper correspondent. 
— From  Harper's  Weekly. 


THE    HOMESTEAD    BATTLE 

THE  chagrin  experienced  by  Andrew 
Carnegie  at  the  unsatisfactory  outcome 
of  his  plans  in  1889  was  forcibly  ex- 
pressed in  many  of  his  characteristic 
letters  to  Pittsburg  during  the  three- 
year  term  of  the  agreement  with  the 
Amalgamated  Association  ;  and  as 
the  time  approached  for  its  revision 
measures  were  taken  to  avoid  a  repeti- 
tion of  the  former  fiasco.  What  these 
were  may  now  be  frankly  stated. 
The  injudicious  attempts  of  Mr.  Carnegie's  literary  friends 
to  deprive  him  of  his  proper  share  of  the  honor  or  responsibil- 
ity of  planning  the  discomfiture  of  the  Amalgamated  Associa- 
tion, joined  to  his  own  modest  disclaimers,  have  led  to  much 
mystification  in  the  public  mind  concerning  his  real  position 
in  the  matter.  It  is  time  to  let  in  the  light  on  this  much- 
debated  question. 

On  April  4th,  1892,  nearly  three  months  before  the  expira- 
tion of  the  agreement  with  the  Amalgamated  Association,  An- 
drew Carnegie  sent  to  Pittsburg  the  draft  of  a  notice  to  the 
Homestead  employees.  Mr.  Frick,  who  was  to  be  chairman  of 
the  consolidated  Carnegie  Steel  Company,  then  in  process  of  for- 
mation, disapproved  of  this  notice,  so  that,  despite  Mr.  Car- 
negie's wishes,  it  was  never  issued,  and  has  never  before  been 

published.     It  is  as  follows  : 

203 


204  THE   HOMESTEAD  BATTLE 


ANDREW  CARNEGIE, 

5  West51stSt 


New  York,  April  4,  1892. 


NOTICE 

TO   EMPLOYEES  AT   HOMESTEAD   WORKS. 

These  Works  having  been  consolidated  with  the  Edgar 
Thomson  and  Duquesne,  and  other  mills,  there  has  been  forced 
upon  this  Firm  the  question  Whether  its  Works  are  to  be  run 
'Union'  or  'Non-Union.'  As  the  vast  majority  of  our  em- 
ployees are  Non- Union,  the  Firm  has  decided  that  the  minor- 
ity must  give  place  to  the  majority.  These  works  therefore, 
will  be  necessarily  Non-Union  after  the  expiration  of  the  pres- 
ent agreement. 

JHiis-^doeajiotirnply  that   tjernen  will  rnake  lower  wages. 
On  the  contrary/most  ot  the  men  at  Edgar  Thomson  airchBtr* — 
quesne  Works,  both  Non-Union,  have  made   and  are  making 
higher  wages  than  those  at  Homestead,  which  has  hitherto  been 
Union. 

The  facilities  and  modes  of  working  at  Homestead  Works 
differ  so  much  from  those  of  steel  mills  generally  in  Pittsburgh 
that  a  scale  suitable  for  these  is  inapplicable  to  Homestead. 

A  scale  will  be  arranged  which  will  compare  favorably  with 
that  at  the  other  works  named  ;  that  is  to  say,  the  Firm  intends 
that  the  men  of  Homestead  shall  make  as  much  as  the  men 
at  either  Duquesne  or  Edgar  Thomson.  Owing  to  the  great 
changes  and  improvements  made  in  the  Converting  Works, 
Beam  Mills, 'Open  Hearth  Furnaces,  etc.,  and  the  intended  run- 
ning of  hot  metal  in  the  latter,  the  products  of  the  works  will  be 
greatly  increased,  so  that  at  the  rates  per  ton  paid  at  Braddock 
and  Duquesne,  the  monthly  earnings  of  the  men  may  be  greater 
than  hitherto.  While  the  .lumber  of  men  required  will,  of 
course,  be  reduced,  the  extensions  at  Duquesne  and  Edgar 
Thomson  as  well  as  at  Homestead  will,  it  is  hoped,  enable  the 
firm  to  give  profitable  employment  to  such  of  its  desirable  em- 
ployees as  may  temporarily  be  displaced.  The  firm  will  in  all 
cases  give  the  preferences  to  such  satisfactory  employees. 

This  action  is  not  taken  in  any  spirit  of  hostility  to  labor 
organizations,  but  every  man  will  see  that  the  firm  cannot  run 
Union  and  Non-Union.  It  must  be  either  one  or  the  other. 


CARNEGIE'S   UNCOMPROMISING  ATTITUDE    205 

On  his  original  draft  of  this  notice  Mr.  Carnegie  adds : 
"  Should  this  be  determined  upon,  Mr.  Potter   [the  superin- 
tendent]  should  roll  a  large  lot  of  plates  ahead,  which  can  be 
finished,  should  the  works  be  stopped  for  a  time." 

At  this  time  an  exchange  of  views  had  taken  place  between 
the  Amalgamated  Association  and  the  firm ;  and  the  workmen 
had  been  given  till  June  24th  to  definitely  decide  whether  they 
would  accept  a  new  agreement  embodying  certain  reductions  in 
the  wage- scale.  Before  any  word  had  been  received  from  the 
workmen's  organization  Mr.  Carnegie  went  abroad  ;  and  on  June 
loth  he  sent  a  long  letter  setting  forth  his  views  as  to  the  con- 
duct and  possible  outcome  of  the  negotiations.  The  part  relat- 
ing to  these  is  as  follows : 

COWORTH  PARK, 
SUNNINGDALE, 

BERKS. 
June  10,  1892. 

"As  I  understand  matters  at  Homestead,  it  is  not  only  the 
wages  paid,  but  the  number  of  men  required  by  Amalgamated 
rules  which  makes  our  labor  rates  so  much  higher  than  those 
in  the  East. 

Of  course,  you  will  be  asked  to  confer,  and  I  know  you  will 
decline  all  conferences,  as  you  have  taken  your  stand  and  have 
nothing  more  to  say. 

It  is  fortunate  that  only  a  part  of  the  Works  are  concerned. 
Provided  you  have  plenty  of  plates  rolled,  I  suppose  you  can 
keep  on  with  armor.  Potter  will,  no  doubt,  intimate  to  the  men 
that  refusal  of  scale  means  running  only  as  Non-Union.  This 
may  cause  acceptance,  but  I  do  not  think  so.  The  chances  are, 
you  will  have  to  prepare  for  a  struggle,  in  which  case  the  notice 
[i.e.  that  the  works  are  henceforth  to  be  non-union]  should  go 
up  promptly  on  the  morning  of  the  25th.  Of  course  you  will 
win,  and  win  easier  than  you  suppose,  owing  to  the  present 
condition  of  markets."  ...... 

ANDREW  CARNEGIE. 

Notwithstanding  Mr.  Carnegie's  desire,  thus  expressed  on 
June  loth,  that  no  further  conference  should  be  held  with  the 
workmen,  Mr.  Frick,  in  his  anxiety  to  avoid  open  conflict,  met 


206  THE  HOMESTEAD  BATTLE 

Mr.  Weihe,  the  president  of  the  Amalgamated  Association,  and 
a  committee  of  about  twenty-five  men  from  Homestead  on  June 
23d.  The  conference  lasted  from  ten  o'clock  in  the  morning 
until  late  in  the  afternoon;  and  resulted  in  Mr.  Prick's  making 
an  important  concession  on  one  of  the  three  points  of  differ- 
ence between  the  firm  and  the  men.  Neither  side  being  willing 
to  yield  on  other  points,  the  conference  broke  up  and  prepara- 
tions were  made  for  the  struggle. 

In  the  mean  time  other  letters  had  been  received  from  Mr. 
Carnegie,  showing  his  uncompromising  attitude  towards  the 
labor-union.  Writing  from  Coworth  Park,  Sunningdale,  Berks, 
on  June  i/th,  1892,  he  underlined  a  passage  as  follows : 

"  Perhaps  if  Homestead  men  understand  that  non-acceptance 
means  Non-Union  forever,  they  will  accept." 

Again  on  June  28th,  he  wrote,  also  from  Coworth  Park, 
Sunningdale,  Berks : 

"  Cables  do  not  seem  favorable  to  a  settlement  at  Home- 
stead. If  these  be  correct,  this  is  your  chance  to  reorganize 
the  whole  affair,  and  some  one  over  Potter  should  exact  good 
reasons  for  employing  every  man.  Far  too  many  men  required 
by  Amalgamated  rules. 

From  indications,  I  cannot  resist  the  conclusion  that  the 
'Force  Report'  has  not  received  necessary  attention  at  Home- 
stead, but  I  see  you  are  pegging  away  on  the  right  track." 

The  outstanding  differences  between  the  firm  and  its  work- 
men at  this  time  were  truly  insignificant;  and  there  is  no  doubt 
they  would  have  been  promptly  settled  but  for  the  fact  that  the 
general  rolling-mill  scales  were  also  under  discussion ;  and  the 
Amalgamated  Association  feared  that  any  concessions  at  Home- 
stead would  weaken  them  in  their  contest  with  the  iron- 
mills  throughout  the  country.  The  questions  involved  were 
these : 

First,  a  reduction  in  the  minimum  of  the  wage-scale.  This 
was  based  upon  the  price  of  4  by  4  Bessemer  billets ;  the  reduc- 
tion proposed  being  from  $25  to  $22. 


CAUSES   OF   THE   STRIKE  207 

Second,  a  change  in  the  date  of  the  operation  of  the  scale 
from  June  3Oth  to  December  3ist. 

Third,  a  reduction  of  tonnage  rates  at  those  open-hearth 
furnaces  and  mills  where  important  improvements  had  been 
made  and  new  machinery  added,  whereby  the  output  had  been 
largely  increased. 

As  to  the  justice  of  the  company's  demands  there  is  no 
question.  The  price  of  all  the  products  of  the  Homestead  mills 
had  fallen,  during  the  term  of  the  last  agreement,  from  sixteen 
to  thirty-nine  per  cent.  ;  and  billets  had  dropped  from  $27  a 
ton  to  $22.  Under  the  old  agreement  there  was  no  decline  in 
wages  after  billets  had  got  below  $25  a  ton,  no  matter  how  low 
prices  went ;  and  the  steel  company  not  unreasonably  claimed 
that  as  they  were  willing  to  pay  proportionate  wages  when 
prices  rose,  the  men  ought  to  accept  reductions  to  a  reasonable 
point  when  prices  declined.  So  they  fixed  upon  $22  as  a  mini- 
mum; and  Mr.  Frick,  at  the  conference  of  June  23d,  raised  this 
to  $23.  The  men  contended  for  $24,  and  there  the  matter 
ended. 

Concerning  the  second  point,  the  company  claimed  that  as 
contracts  for  material  were  generally  made  at  the  beginning  of 
the  year,  the  price  of  labor  ought  to  be  fixed  at  the  same  time. 
This  was  resisted  by  the  men  on  the  ground  that  if  a  contest 
arose  between  themselves  and  their  employers  it  was  better 
that  it  should  come  in  summer  than  in  winter.  No  doubt  past 
experience  of  the  horrors  of  mid-winter  strikes  justified  their 
opposition  to  the  change;  but  unfortunately  for  the  consistency 
of  the  men,  the  steel  company  was  able  to  point  out  that  in 
some  competing  establishments  the  Amalgamated  Association 
permitted  their  scale  to  expire  on  December  3ist.  The  com- 
pany's demand  was  therefore  strengthened  by  precedents. 

As  to  the  third  point,  which  involved  the  most  important 
matter  of  all,  the  reasonableness  of  the  Carnegie  demand  was 
beyond  question.  The  proposed  reduction  in  tonnage  rates 
applied  to  only  three  departments  in  the  works :  namely,  the 


208 


THE   HOMESTEAD   BATTLE 


32-inch  slabbing-mill,  the  n  9-inch  plate-mill,  and  the  open- 
hearth  furnaces.  An  illustration  will  best  serve  to  make  clear 
the  point  at  issue. 

When  the  scale  for  1889  was  signed  for  the  1 1 9-inch  plate- 
mill,  it  was  based  on  rolling  plates  direct  from  ingots,  and  the 
output  was  about  2,500  tons  a  month.  But  when  the  ingots 
were  first  passed  through  the  32-inch  slabbing-mill — the  great 


The  ii9-inch  plate-mill. 


Copyright  by  S.  S.  McClure  Co. 


machine  that  had  developed  out  of  Zimmer's  little  Universal  mill 
— and  then  through  the  1 1 9-inch  plate-mill,  the  tonnage  of  the 
latter  was  more  than  doubled.  With  the  sweet  unreason  of  the 
toiler,  the  men  who  operated  the  1 1 9-inch  plate-mill  refused  to 
share  with  their  employers  the  cost  of  running  the  slabbing- 
mill,  and  demanded  just  as  much  for  rolling  plates  from  slabs 
as  they  had  been  getting  for  rolling  plates  from  ingots ;  insist- 
ing, moreover,  upon  receiving  all  the  benefit  of  the  investment 
that  had  gone  into  this  million-dollar  machine.  Similarly  in 


FIRST  ACTS   OF    VIOLENCE  209 

the  open-hearth  department.  When  the  1889  scale  was  signed, 
this  was  a  comparatively  new  business ;  and  in  three  years  it 
had  been  vastly  improved.  Tonnages  had  increased ;  labor  had 
been  made  easier  by  the  substitution  of  machines;  but  the 
benefits  had  mainly  gone  to  the  workmen. 

Most  striking  of  all,  however,  is  the  fact  that  out  of  over 
3,800  men  employed  at  Homestead,  the  wages  of  only  325  were 
affected  by  the  new  scale.  Over  3,500  men  stood  exactly  as 
they  did  before,  and  were  satisfied.  During  the  previous  week 
most  of  them  had  signed  agreements  with  the  company  for  the 
ensuing  three  years ;  and  although  3,000  of  them  belonged  in 
no  way  to  the  Amalgamated  Association,  and,  indeed,  were  for 
the  most  part  ineligible  for  membership  in  it,  they  broke  their 
contracts  and  joined  the  dissatisfied  clique  that  controlled  the 
local  lodges  of  the  labor-union.  It  should  be  said,  however,  in 
justice  to  them,  that  ninety-nine  men  in  a  hundred  believed  the  , 
Carnegie  Company  was  simply  "  bluffing  "  as  it  had  done  in  • 
1889;  and  even  the  hundredth  man  was  convinced  that  "the 
little  boss  "  would  never  enter  into  a  serious  conflict  with  work- 
men for  whom  he  had  expressed  such  affection.  So  they  hanged 
Chairman  Frick  and  Superintendent  Potter  in  effigy ;  and  when 
an  assistant  was  sent  to  rernove  the  figures  he  was  drenched 
Vvith  streams  of  water  fropa  hose  pipes  and  jeered  out  of  the 
shops.  One  man  who  ventured  to  express  his  intention  of  con- 
tinuing at  work  was  badly  beaten,  then  conducted  to  the  train, 
and  banished  from  the  town. 

A  few  days  after  the  fruitless  conference  of  June  23d  the 
eight  lodges  of  the  Amalgamated  Association  at  Homestead 
created  an  Advisory  Committee,  consisting  of  five  delegates 
from  each  lodge,  with  Hugh  O'Donnell  as  chairman.  The  pur- 
pose of  this  Advisory  Committee  was  to  take  charge  of  the 
strike.  Its  first  active  measure  was  to  pass  a  resolution  order- 
ing the  mechanics,  laborers,  and  other  employees  of  the  mill,  who 
had  made  new  contracts  with  the  company,  to  refuse  to  work 
until  the  Amalgamated  Association  was  recognized  and  its 


210  THE   HOMESTEAD  BATTLE 

terms  agreed  to.  It  being  evident  that  the  order  would  be 
obeyed,  the  company  gradually  closed  the  several  departments 
of  the  works,  until  on  the  ist  of  July  there  was  not  a  wheel 
turning  nor  a  furnace  burning  in  the  entire  plant. 

At  the  same  time  the  Advisory  Committee  proceeded  to 
organize  an  army  and  navy  for  offensive  and  defensive  opera- 
tions, and  a  local  government  to  supplant  the  municipal  authori- 
ties. In  speaking  of  these  proceedings  the  chairman  of  the 
Advisory  Committee  used  the  following  language  : 

"  The  Committee  has,  after  mature  deliberation,  decided  to 
organize  their  forces  on  a  truly  military  basis.  The  force  of 
four  thousand  men  has  been  divided  into  three  divisions  or 
watches,  each  of  these  divisions  is  to  devote  eight  hours  of  the 
twenty-four  to  the  task  of  watching  the  plant.  The  Command- 
ers of  these  divisions  are  to  have  as  assistants  eight  captains 
composed  of  one  trusted  man  from  each  of  the  eight  local 
lodges.  These  Captains  will  report  to  the  Division  Command- 
ers, who  in  turn  will  receive  the  orders  from  the  Advisory 
Committee.  During  their  hours  of  duty  these  Captains  will 
have  personal  charge  of  the  most  important  posts,  i.e.,  the 
river  front,  the  water  gates  and  pumps,  the  railway  stations, 
and  the  main  gates  of  the  plant.  The.  girdle  of  pickets  will 
file  reports  to  the  main  headquarters  every  half  hour,  and  so 
complete  and  detailed  is  the  plan  of  campaign  that  in  ten  min- 
utes' time  the  Committee  can  communicate  with  the  men  at  any 
given  point  within  a  radius  of  five  miles.  In  addition  to  all 
this,  there  will  be  held  in  reserve  a  force  of  800  Slavs  and 
Hungarians.  The  brigade  of  foreigners  will  be  under  the  com- 
mand of  two  Hungarians  and  two  interpreters." 

Details  of  pickets  were  sent  out  upon  every  highway  leading 
to  Homestead,  or  towards  the  steel  works,  instructed  to  permit 
no  person  who  could  not  give  a  satisfactory  account  of  himself 
to  enter  Homestead.  A  steamboat  was  chartered  to  patrol  the 
Monongahela  River  with  an  accompanying  fleet  of  some  fifty 
rowboats,  located  where  they  would  be  available  for  an  armed 
body  of  men  on  the  shortest  possible  notice.  A  system  of 
signals  was  adopted,  flags  being  used  in  daylight,  and  lights 
and  Roman  candles  at  night.  A  large  steam-whistle  was  pro- 


STRIKERS'  MILITARY  ORGANIZATION       211 

cured  and  placed  upon  the  Electric  Light  Works  in  the  borough 
of  Homestead;  and  a  code  of  signals  arranged  so  that  the  num- 
ber of  blasts  from  this  whistle  would  be  understood  to  indicate 
the  point  at  which  the  commanders  desired  their  men  to  assem- 
ble for  battle. 

The  efficiency  of  this  organization  was  quickly  put  to  a  test. 
On  the  very  first  evening  of  the  lockout  intelligence  was  re- 
ceived at  headquarters  that  two  hundred  "black  sheep"  were 
on  their  way  to  the  works.  In  less  than  two  minutes  shrill 
blasts  from  the  steam-whistle  conveyed  the  false  news  to  the 
waiting  scouts ;  and  before  another  ten  minutes  had  elapsed  a 
thousand  men  had  been  marshalled  at  the  point  of  the  expected 
landing.  Such  alarms  becoming  inconveniently  frequent,  camp- 
fires  were  lighted  along  the  river-banks  and  more  pickets  estab- 
lished; and  all  night  long  the  stream  was  patrolled  by  the 
strikers'  steamer  Edna,  which  had  been  furnished  with  special 
steam-whistles  for  signalling. 

On  the  second  day  a  slight  indication  of  smoke  was  ob- 
served at  one  of  the  chimneys  of  the  works ;  and  the  Advisory 
Committee  sent  a  written  notice  to  the  company  that  the  fact 
"caused  considerable  excitement  among  our  men,"  and  that  "if 
the  gas  is  not  turned  off  we  cannot  be  responsible  for  any  act 
that  may  be  committed."  At  the  same  time  placards  were 
printed  and  posted  in  the  hotel  and  places  of  business  in  Home- 
stead, saying : 


All  Discussion  of  the  Wage  Question 
in  This  Place  is  Positively  Forbidden. 
By  order  of  the 

ADVISORY   COMMITTEE. 


In  the  same  arbitrary  manner  the  strikers  refused  to  admit 
men  to  the  works  whose  presence  and  attention  was  necessary 
to  prevent  deterioration  and  destruction  of  machinery. 


212  THE   HOMESTEAD   BATTLE 

On  July  4th  the  Carnegie  Company  served  a  written  notice 
upon  the  sheriff  of  Allegheny  County,  calling  upon  him  to  pro- 
tect the  property,  and  holding  the  county  responsible  for  its 
injury  or  destruction.  The  next  day  the  sheriff  accompanied 
by  deputies  went  to  Homestead,  and  was  escorted  round  the 
works  by  the  Advisory  Committee,  who  pointed  out  their 
"guards,"  and  asked  the  sheriff  to  give  them  an  official  status 
by  making  them  his  deputies.  The  astonished  official  declined 
the  request  and  returned  to  Pittsburg.  The  same  day  he  sent 
up  a  dozen  deputies,  who  were  met  by  the  strikers  and  promptly 
hustled  out  of  town.  The  Advisory  Committee  aided  their 
departure  by  conveying  them  across  the  river  in  their  steamer 
and  putting  them  in  the  trolley-cars  for  Pittsburg.  A  sheriff's 
proclamation  against  unlawful  acts  was  torn  down  and  the  bill- 
poster escorted  out  of  town..  Such  were  the  results  of  the  at- 
tempts of  the  county  officials  to  safeguard  the  works. 

The  same  night  two  barges,  containing  some  three  hundred 
watchmen  hired  by  the  Carnegie  Steel  Company  through  Pin- 
kerton's  Detective  Agency  and  destined  for  Homestead,  were 
towed  up  the  river  from  a  point  a  few  miles  below  Pittsburg. 
The  men  were  accompanied  by  a  deputy  sheriff ;  and  arrange- 
ments had  been  made  to  deputize  them,  if  circumstances  arose 
to  require  it.  The  barges  were  fitted  up  with  sleeping  bunks 
and  cooking  arrangements ;  and,  besides  a  store  of  provisions, 
they  carried  several  cases  of  firearms  and  ammunition.  In 
other  respects  they  were  just  like  any  of  the  other  barges  used 
on  the  river.  In  spite  of  all  precautions  to  keep  the  character 
and  destination  of  the  boats  secret,  they  were  observed  by  a  spy 
of  the  Advisory  Committee  as  they  passed  under  the  Smithfield 
Street  bridge,  Pittsburg,  soon  after  midnight ;  and  a  warning 
was  promptly  telegraphed  to  Hugh  O'Donnell.  Similar  notice 
was  sent  from  Lock  No.  i,  some  three  miles  below  Homestead. 
At  once  the  preconcerted  signal  was  given;  and  the  sleeping 
town  was  roused  by  the  shrieks  of  the  committee's  steam - 
whistle.  Men,  women,  and  children  tumbled  into  the  streets 


THE   ARRIVAL    OF   THE   PINKERTONS       213 

in  wild  disorder  and  hurried  towards  the  river-bank.  Many 
openly  carried  guns,  rifles,  and  revolvers;  and  others  armed 
themselves  with  staves  torn  from 'the  garden  fences  as  they  ran 
along. 

At  the  river  all  was  dark  and  silent.  A  mist  hung  over 
the  water  and  dimmed  the  glare  of  the  electric  lamps  and 
fires  of  the  Carrie  furnaces  across  the  stream.  In  a  little 
while  the  lights  of  the  barges  were  sighted;  and  the  strikers' 
steamer  Edna  gave  the  alarm  by  blowing  her  whistle.  Pistols 
were  also  fired  from  numerous  little  boats  and  by  dozens  of 
pickets  along  the  bank.  Every  steam- whistle  in  town  joined 
in  the  shrill  demonstration ;  and  the  slumbering  Pinkertons 
turned  out  of  their  bunks  at  the  sound  and  started  to  break 
open  the  cases  of  rifles  to  defend  themselves.  Only  a  dozen 
were  at  first  allowed  to  have  the  rifles.  Thus  the  barges,  pelted 
by  the  strikers'  bullets,  passed  the  town  of  Homestead;  while 
the  shouting  crowds  ran  along  the  banks,  keeping  pace  with 
them  and  firing  as  often  as  they  could  reload  their  arms.  One 
bullet  passed  through  the  pilot-house  of  the  Little  Bill,  the  tow- 
ing steamer,  and  others  rattled  against  the  sides  of  the  barges. 

When  the  people  on  the  banks  reached  the  steel  works  they 
were  stopped  for  a  moment  by  the  wooden  fence  which  sur- 
rounded the  place ;  but  a  section  of  this  was  soon  torn  down, 
and  the  crowd  swept  through  the  gap,  arriving  at  the  pumping 
station  in  time  to  see  the  barges  thrust  against  the  shore. 

By  this  time  the  dawning  light  of  a  new  day  was  breaking 
upon  the  scene.  As  the  gangplank  was  shoved  ashore  from  the 
barges,  the  crowd  rushed  down  the  slope  to  the  water's  edge 
with  loud  cries  and  threatening  gestures.  One  of  them,  a 
young  fellow,  who,  curiously  enough,  was  a  religious  leader  in 
the  community,  threw  himself  flat  upon  the  gangplank,  as  if 
daring  the  Pinkertons  to  march  over  his  prostrate  body.  Dur- 
ing the  struggle  to  push  the  fellow  aside  a  shot  was  fired,  fol- 
lowed first  by  a  scattering  volley  from  the  crowd,  then  by  the 
return  fire  of  a  dozen  of  Pinkertons.  The  fusillade  lasted  for 


2I4 


THE   HOMESTEAD   BATTLE 


a  couple  of  minutes,  during  which  most  of  the  crowd  on  shore 
scrambled  up  the  bank  in  terror  and  confusion,  and  took  refuge 
behind  the  piles  of  steel  in  the  yards.  During  this  exchange 
of  shots  two  of  the  strikers  were  killed  and  several  wounded. 
A  number  of  the  Pinkerton  men  were  also  injured,  one  of  them 
fatally. 

After  the  people  on  shore  had  retreated  behind  the  piles  of 
metal  and  the  Pinkerton  men  had  taken  refuge  inside  the  barges, 


The  Homestead  Battle. 

~-Froi)i  Frank  Leslie's  Illustrated  Weekly. 

the  firing  ceased ;  and  a  short  conference  was  held  between  the 
leaders  on  shore  and  the  chief  of  the  watchmen.  The  latter 
explained  that  he  and  his  men  had  been  sent  there  to  take 
possession  of  the  works  to  guard  them  for  the  company,  and 
that  they  would  certainly  enter  the  place,  using  force  if  need 
be.  The  strikers  defied  the  leader  of  the  watchmen,  saying 
that  before  he  entered  those  mills  he  would  "  trample  over  the 
dead  bodies  of  3,000  honest  workingmen. " 


DYNAMITE  AND  FIRE-RAFTS  215 

A  couple  of  hours  later  a  number  of  watchmen  stepped 
ashore  from  the  barges,  and  were  met  by  a  rattling  volley  from 
the  strikers,  who  had  erected  barricades  of  steel  billets  and 
beams  in  the  mill  yard.  The  Pinkertons  rapidly  sought  shelter 
in  the  boats  again;  and  then  returned  the  fire  through  windows 
and  port-holes. 

Soon  after  nine  o'clock  the  mill  workers  secured  a  small 
cannon ;  and  with  this  they  opened  fire  from  the  opposite  side 
of  the  river.  During  the  second  skirmish  the  tugboat  Little 
Bill,  which  was  the  only  means  of  moving  the  barges,  went  up 
the  river  with  the  dead  and  wounded ;  and  when  she  returned 
an  hour  or  two  later  to  haul  away  the  two  barges,  she  was  sub- 
jected to  a  merciless  fusillade.  One  of  her  crew  was  killed  and 
several  wounded ;  and  the  pilot  was  obliged  to  lie  down  to  avoid 
being  shot,  as  the  boat  drifted  through  the  gauntlet  of  fire  and 
so  escaped  to  Pittsburg.  Thus,  left  helpless  in  their  stranded 
barges,  the  wretched  watchmen  spent  the  long  sultry  day — a 
day  in  which  American  workmen  seemed  inspired  with  the  spirit 
of  the  French  Reign  of  Terror.  There  was  no  horror  conceived 
in  that  barbaric  time  that  had  not  its  counterfeit  presentment 
at  Homestead.  Oil  was  pumped  onto  the  boats  and  spread 
upon  the  river,  to  burn  up  the  imprisoned  Pinkertons.  Burn- 
ing rafts  were  floated  down  to  them.  Dynamite  was  hurled 
upon  the  barges  to  break  them  open  that  sharpshooters  might 
more  readily  pick  off  some  crouching  figure.  A  car,  loaded 
with  oil,  was  set  on  fire  and  run  down  an  inclined  track  towards 
the  barges,  in  the  hope  that  some  of  the  burning  stuff  would 
reach  them.  Natural  gas  was  directed  from  a  main  near  by  so 
as  to  envelop  the  boats,  and  rockets  were  fired  into  it  to  explode 
it.  The  cannon  on  the  opposite  bank,  soon  re-enforced  by  a 
second  one,  played  upon  the  barges  and  their  helpless  occupants ; 
and  riflemen  from  a  hundred  points  of  vantage  potted  any  un- 
wary sufferer  who  ventured  near  a  window  or  other  opening  for  a 
gasp  of  fresh  air.  But  as  if  to  keep  the  name  of  the  American 
workman  from  everlasting  infamy,  every  diabolical  effort  failed. 


216 


THE   HOMESTEAD   BATTLE 


The  dynamite  exploded  harmlessly;  the  oil-covered  waters 
flowed  away  from  the  barges ;  the  burning  car  stopped  short  in 
its  course;  the  fire  of  the  cannon  was  wild,  and  it  was  stopped 
after  a  shot  had  taken  off  the  head  of  a  striker.  But  the  hor- 
rors that  were  achieved  were  enough  to  give  this  6th  of  July  a 
place  of  its  own  in  the  history  of  Western  Pennsylvania.  A 
white  flag  was  shown  on  the  barges,  and  greeted  with  shouts  of 


Shooting  at  the  Pinkerton  guards  from  behind  barricades  of  steel. 

— From  the  London  Daily  Graphic. 

"  No  quarter,"  and  a  volley  of  bullets.  A  man  was  seen  to  fall 
near  the  flag ;  and  the  shouts  of  anger  changed  to  cheers.  Every 
eminence  about  the  works,  the  long  trestle  and  the  new  station 
in  the  mill,  were  black  with  vociferous  crowds.  The  adjoining 
hills  were  lined  with  watchers ;  and  everywhere  the  thirst  of 
human  blood  was  manifest.  No  voice  was  raised  in  pity;  no 
word  was  spoken  for  peace.  From  Pittsburg,  and  even  from 
the  Edgar  Thomson  works  at  Braddock,  armed  re-enforcements 
marched  to  help  the  strikers,  who  were  already  fifteen  to  one, 
and  sheltered  by  fortifications  of  solid  steel.  The  wretched 


SAVAGERY  OF   THE   MOB  217 

watchmen,  cooped  up  in  stranded  boats,  had  neither  the  power 
to  advance  nor  to  retreat. 

The  events  of  this  dreadful  day  have  been  told  by  Myron  R. 
Stowell,  an  eye-witness,  in  a  little  book  full  of  sympathy  for  the 
workmen.  For  this  reason  his  story  cannot  be  impugned  on 
the  ground  of  prejudice  against  the  strikers.  He  says: 

"  Many  a  battle  has  gone  down  in  history  where  less  shoot- 
ing was  done  and  fewer  people  were  killed.  There  were  hun- 
dreds of  men,  well  armed,  thirsting  for  the  lives  of  others  in  the 
boat,  while  thousands  of  men  and  women  stood  just  out  of  range 
and  cheered  them  on.  Each  crack  of  a  rifle  made  them  more 
blood-thirsty  and  each  boom  of  the  cannon  more  eager  for  the 
blood  of  the  officers.  One  of  the  strikers  remarked : 

'There  are  but  two  weeks  between  civilization  and  barba- 
rism, and  I  believe  it  will  take  only  two  days  of  this  work  to 
make  the  change.' 

Indeed,  it  looked  as  if  the  veneering  of  gentility  had  al- 
ready been  cracked. 

Then  another  shot  and  another  cheer  told  that  somebody 
had  been  hit.  The  Pinkertons  were  too  badly  scared  to  make 
any  effort  to  shoot,  and  were  crowded  like  sheep  into  the  barge 
which  lay  farthest  from  shore.  Fresh  ammunition  and  arms 
had  arrived  from  Pittsburg  for  the  strikers  and  the  men  bent 
harder  to  their  tasks.  They  worked  nearer  the  river  that  their 
fire  might  be  more  deadly.  The  workers  could  be  seen  drag- 
ging their  bodies  like  snakes  along  the  ground  to  where  they 
could  get  a  better  shot.  The  cannon  would  again  roar,  but  the 
shot  would  land  in  the  water  above  the  boat.  Once  a  piece  of 
one  of  the  doors  fell  with  the  shot.  Several  of  the  imported 
officers  were  revealed,  and  a  score  of  shots  were  fired  in  quick 
succession.  Some  one  must  have  fallen,  for  cheer  on  cheer  of 
triumph  went  up  from  thousands  of  throats.  At  every  shot  of 
the  cannon  thereafter  a  volley  of  shots  was  heard  from  the 
sharpshooters,  who  had  seen  some  one  on  the  boat.  They  only 
shot  when  they  saw  something,  and  every  crack  of  a  rifle  meant 
an  attempt  on  a  human  life. 

At  one  o'clock  there  was  a  wild  commotion  at  the  new  sta- 
tion. A  tall,  brawny  workman  waved  two  sticks  of  dynamite 
high  above  his  head.  By  his  side  was  a  basket  full  of  the 
deadly  explosive.  The  excited  gathering,  that  a  moment  before 
had  been  wild,  was  silent,  and  listened.  His  voice  was  loud 
and  distinct.  He  said  : 


21 8  THE   HOMESTEAD   BATTLE 

'Men  of  Homestead  and  Fellow  Strikers:  Our  friends 
have  been  murdered — our  brothers  have  been  shot  down  before 
our  eyes  by  hired  thugs !  The  blood  of  honest  workmen  has 
been  spilled.  Yonder  in  those  boats  are  hundreds  of  men  who 
have  murdered  our  friends  and  would  ravish  our  homes  !  Men 
of  Homestead,  we  must  kill  them  !  Not  one  must  escape  alive ! ' 

'Aye,  aye,  aye!'  shouted  a  half  thousand  voices.  Then 
the  Herculean  workman  continued  : 

'The  cannon  has  failed  to  sink  the  boats — the  oil  has  failed 
to  burn  them.  Who  will  follow  me  ?  These  bombs  will  do  the 
work ! ' 

As  he  spoke  he  flourished  the  dynamite.  A  score  of  men 
raised  their  clubs,  and  regardless  of  the  fact  that  they  were 
within  the  range  of  the  Pinkerton  rifles,  followed  him.  They 
ran  in  their  haste  to  take  human  life.  They  were  not  savages, 
but  men  of  families,  who,  perhaps  a  few  hours  before,  had  held 
infants  on  their  knees  or  kissed  their  wives  farewell.  They 
were  good,  strong  men,  wrought  up  by  the  sight  of  blood,  and 
ready  to  take  the  lives  of  those  who  threatened  them  and  theirs. 

With  their  penknives  they  scooped  up  holes  for  the  car- 
tridges and  fuse.  The  latter  was  very  short — it  would  burn 
quickly.  The  crowds  could  see  them  light  the  matches  and  hold 
the  messengers  of  death  until  they  burned  closely.  Then,  with 
strong  right  arms  drawn  until  every  muscle  showed  like  a  whip- 
cord, they  let  fly,  and  the  explosions  were  cheered  by  the  excited 
men  and  women.  The  distance  was  long,  and  the  bombs  had 
to  be  thrown  from  behind  some  shelter,  and  many  of  the  mis- 
siles fell  short  of  the  mark,  but  when  one  landed  on  the  roof 
cheer  upon  cheer  went  up.  One  man  had  crawled  down  on  the 
structural  iron,  and  then,  by  making  a  throw  of  nearly  a  hun- 
dred feet,  struck  the  boat.  The  front  end  heaved  and  a  few 
boards  flew.  He  lighted  another  fuse  and  another  stick  of 
dynamite.  It  described  a  semi-circle  in  the  air,  leaving  a  trail 
of  smoke  behind.  It  was  going  to  land  squarely  on  top  of  the 
Monongahela,  but  instead  of  striking  the  roof  it  splashed  into 
a  bucket  of  water.  It  sizzled  for  a  moment  and  then  went  out 
without  exploding.  It  had  hardly  died,  however,  when  another 
from  the  pump-house  fell  on  the  roof.  It  lay  there  smoking  a 
moment  while  the  strikers  prayed  it  might  wreck  the  craft. 
There  was  ah  explosion,  and  a  hole  was  torn  in  the  roof.  It 
was  not  then  known  whether  it  killed  anybody  inside,  but  when 
the  boards  flew  up  a  gondola  hat  went  flying  into  the  air. 
Another  bomb  was  thrown  into  the  bow  of  the  boat.  The  clear- 
ing smoke  showed  a  door  was  gone.  Human  forms  were  seen 


SURRENDER    OF   THE    WATCHMEN          219 

within,  which  was  a  sign  for  the  sharpshooters  to  do  some  exe- 
cution At  i  135  o'clock  several  men  went  out  on  the  bow  of 
the  boat  to  pick  up  their  dead  and  wounded  companions.  There 
were  a  half-dozen  shots  and  two  more  men  fell.  Then  came 
more  curses  for  the  firm  and  additional  cheers  of  victory. 

Another  stick  of  dynamite  fell  five  minutes  later,  and  in 
three  minutes  more  another  tore  off  a  part  of  the  planks.  Then 
the  men  drew  closer  and  their  work  became  more  deadly. 

Then  it  was  decided  to  throw  oil  again  and  burn  the  boat. 
At  12:10  o'clock  the  hose  carriage  belonging  to  the  city,  and 
half  a  dozen  barrels  of  lubricating  oil  were  brought  to  the  water 
tanks,  together  with  a  fire  engine,  but  there  was  great  difficulty 
in  getting  it  to  work.  In  the  meantime  a  new  supply  of  dyna- 
mite had  arrived.  The  boxes  were  knocked  open  and  the  men 
drew  out  the  explosives  as  unconcernedly  as  they  would  have 
handled  their  dinners.  Then  they  made  another  rush  for  the 
barges  and  there  was  more  sharp  firing. 

About  this  time  a  coal  steamer's  whistle  was  heard  and  the 
sharpshooters  stampeded  to  the  rear  for  an  instant,  thinking 
another  corps  of  deputies  had  arrived.  The  alarm  was  false, 
and  they  soon  resumed  operations.  Then  they  got  the  oil  to 
flowing,  but,  as  in  the  morning,  it  circled  around  the  boats  and 
refused  to  burn. 

The  fight  still  continued  and  more  attempts  were  made  to 
burn  the  boats  and  the  three  hundred  Pinkertons  within.  It 
was  four  o'clock  when  the  giant  form  of  President  William 
Weihe,  of  the  Amalgamated  Association,  appeared.  Hundreds 
followed  him  into  one  of  the  mills.  He  tried  to  address  the 
men  but  they  refused  to  listen  to  him.  President-elect  Garland 
was  there  also,  but  the  cries  of  'Burn  the  boats,  kill  the  Pinker- 
tons,  no  quarter  for  the  murderers,'  drowned  his  voice." 

Towards  five  o'clock  a  fresh  attempt  at  surrender  was  made 
by  thQ  men  in  the  barges.  Again  a  white  flag  was  displayed. 
Fortunately  at  this  moment  the  leaders  of  the  strikers  were  con- 
ferring as  to  what  measures  should  next  be  taken;  and  the  Pin- 
kertons' signal  suggested  a  way  of  ending  a  desperate  situation. 
O'Donnell,  chairman  of  the  Advisory  Committee,  stepped  down 
the  embankment  to  receive  the  message  of  peace.  The  spokes- 
man of  the  imprisoned  wretches  offered  to  surrender  on  condi- 
tion of  protection  from  mob  violence.  This  being  agreed  to, 
the  doors  were  flung  open,  and  the  victorious  strikers  crowded 


220 


THE  HOMESTEAD  BATTLE 


into  the  barges.  The  reporters  who  followed  them  found  one 
dead  and  eleven  wounded  watchmen.  The  rest  were  disarmed 
and  marched  out,  while  the  crowd  swarmed  over  the  boats  for 
loot.  Cases  of  provisions  were  broken  open  and  the  contents  «». 
distributed  among  the  women  and  children;  bedding  and  every 
portable  thing  was  taken  away.  Then  the  barges  were  set  on 
fire ;  and  the  strikers  turned  to  escort  their  prisoners  to  a  pub- 
lic hall  in  town.  One  by  one,  with  bared  heads,  the  latter  de- 


The  burning  barges,  the  evening  of  the  surrender. 

scended  the  gangplank,  climbed  up  the  incline  to  the  mill  yard, 
and  across  it  to  the  public  road ;  and  never  did  captives  suffer 
more  in  running  a  gauntlet  of  redskins.  For  nearly  a  mile  the 
watchmen  walked,  ran,  or  crawled  through  a  lane  of  infuriated 
men,  women,  and  children ;  and  at  every  step  they  were  struck 
with  fists,  clubs,  and  stones.  Their  hats,  satchels,  and  coats 
were  snatched  away  from  them ;  and  in  many  cases  they  were 
robbed  of  their  watches  and  money.  Not  a  man  escaped  injury. 
One  of  them,  Connors,  unable  to  move  and  defend  himself,  was 
deliberately  shot  by  one  of  the  strikers  and  then  clubbed. 


CRUELTY   TO    CAPTIVES 


221 


Another,  named  Edwards,  also  wounded  and  helpless,  was 
clubbed  by  another  striker  with  the  butt  end  of  a  musket.  Both 
of  these  men  died ;  and  another  became  insane  and  committed 


The  attack  on  the  surrendered  guards. 

—From  Leslie's  Weekly. 


suicide  as  a  result  of  the  fearful  beating  received  after  surren- 
der. About  thirty  others  were  afterwards  taken  to  the  hospital 
with  broken  arms  and  disjointed  ankles,  shattered  noses,  gouged 
eyes,  bruised  heads,  and  injured  backs. 


222  THE   HOMESTEAD   BATTLE 

At  midnight  a  special  train  went  to  Homestead  in  charge  of 
the  sheriff  of  Allegheny  County,  and  took  the  Pinkerton  men 
to  Pittsburg  for  safety.  The  day's  casualties  were  ten  men 
killed  and  over  sixty  wounded.  Several  died  later. 

Flushed  with  victory  the  strikers  now  put  the  borough  of 
Homestead  into  a  state  of  siege.  All  strangers  were  excluded, 
including  a  party  of  prominent  railway  and  state  officials  who 
chanced  to  be  passing  through  Pittsburg.  Many  citizens  were 
arrested  and  taken  before  the  strikers'  committee,  just  as  in  the 
early  days  of  the  French  revolution.  Hotel  keepers  were  noti- 
fied not  to  lodge  or  accommodate  newspaper  reporters  whose 
accounts  were  not  favorable  to  the  insurrectionist  government. 
Telegraph  operators  were  compelled  to  exhibit  to  the  self -con- 
stituted authorities  private  messages  that  were  left  for  transmis- 
sion over  the  wires  of  the  public  companies,  so  that  it  might  be 
ascertained  if  anything  detrimental  to  the  dignity  or  the  inter- 
ests of  the  Advisory  Committee  was  being  sent  out.  Several 
journalists  were  arrested  and  held  until  satisfactory  evidence 
could  be  obtained  as  to  their  identity;  and  all  reporters  were 
required  to  have  credentials  and  passports  from  the  Advisory 
Committee,  and  to  wear  a  conspicuous  badge  of  the  Amalga- 
mated Association  to  insure  their  personal  safety.  Some  re- 
porters who  had  incurred  the  strikers'  ill  will  by  publishing 
reports  unfavorable  to  the  workmen  were  arrested,  and  com- 
pelled, hatless  and  coatless,  to  leave  the  town  at  midnight  afoot, 
the  privilege  of  securing  even  a  private  conveyance  being  denied 
them.  And  while  these  conditions  obtained,  a  delegation  of 
strikers  was  at  Harrisburg,  assuring  the  governor  of  Pennsyl- 
vania that  perfect  peace  and  tranquillity  prevailed  in  the  bor- 
ough of  Homestead;  that  the  civil  authorities  were  respected 
and  obeyed;  and  that  the  sheriff's  call  for  troops  should  be 
disregarded. 

It  chanced,  however,  that  the  governor's  own  representative, 
sent  to  Homestead  for  the  purpose  of  reporting  on  the  condi- 
tion of  affairs,  was  arrested  by  the  strikers  and  roughly  escorted 


ARRIVAL    OF   THE   NATIONAL    GUARD       223 

out  of  town.  He  returned,  and  again  he  was  hustled  away. 
This  happened  three  times.  Such  a  practical  illustration  of 
the  negation  of  the  rights  of  citizens  sufficed  to  convince  the 
governor  of  the  need  for  state  troops;  and  on  July  loth  he 
issued  an  order  to  Major- General  Snowden  to  call  out  the  en- 
tire division  of  the  National  Guard,  numbering  some  8,000  men, 
and  mass  them  at  Homestead  to  aid  the  sheriff  of  Allegheny 
County.  Two  days  later  the  troops  arrived  ;  the  open  reign  of 
terror  at  Homestead  came  to  an  end ;  and  the  Carnegie  officials 
were  put  in  possession  of  their  property. 


CHAPTER   XV 
ATTEMPTED    ASSASSINATION   OF    MR.    FRICK 

BEFORE  the  country  had  recovered  from  the 
thrill  of  horror  which  succeeded  the  Home- 
stead battle,  an  attempt  was  made  to  murder 
Mr.  Frick;  and  the  bloody  details  of  the 
assault  were  cabled  to  the  ends  of  the  earth, 
bringing  fresh  disgrace  upon  the  unhappy  town 
of  Homestead.  On  Saturday,  July  23d,  a  Russian 
anarchist  shot  and  stabbed  Mr.  Frick  while  he  was 
seated  in  conversation  with  his  associate,  Mr.  Leishman.  This 
man  had  made  several  previous  visits  to  the  Carnegie  offices, 
where  he  represented  himself  as  the  agent  of  a  New  York  em- 
ployment bureau.  Once  he  had  a  brief  interview  with  Mr. 
Frick,  who  told  him  he  thought  there  would  be  no  need  for  the 
services  of  any  agency,  as  the  managers  were  making  arrange- 
ments by  which  they  hoped  to  get  their  old  employees  back. 

On  the  day  mentioned  this  man  called  again  and  sent  in  his 
card  to  Mr.  Frick,  who  had  just  returned  from  lunch  and  had 
dropped  into  a  chair  at  the  end  of  the  flat-topped  desk  at  which 
he  usually  worked.  It  was  not  his  usual  seat;  and  he  had 
moved  into  it  to  be  nearer  Mr.  Leishman,  who  sat  diagonally 
opposite.  Mr.  Frick  had  swung  round  in  his  chair  so  that  his 
side  was  turned  to  the  door  through  which  the  boy  brought  the 
card.  Before  the  boy  could  regain  the  front  office  with  Mr. 
Frick's  message,  the  man  stepped  through  the  swinging  door 
and  glanced  quickly  around.  Mr.  Frick  looked  up  in  surprise 
at  the  sudden  entry  of  a  stranger,  and  saw  the  man  make  a 
quick  movement  towards  his  hip  pocket.  Realizing  the  mean- 
ing of  the  movement,  Mr.  Frick  sprang  to  his  feet.  At  the 

224 


A    DESPERATE   STRUGGLE  225 

same  moment  the  fellow  had  drawn  and  fired  a  revolver  with 
lightning  rapidity,  and  the  bullet,  after  passing  through  the 
lobe  of  the  left  ear,  struck  Mr.  Frick  in  the  neck.  The  shock 
sent  him  to  the  floor ;  and  as  he  lay  on  the  carpet  the  assassin 
fired  a  second  time,  and  again  the  bullet  struck  Mr.  Frick  in 
the  neck. 

While  this  was  happening  Mr.  Leishman  had  jumped  from 
his  seat  and  was  running  round  the  long  desk  to  get  at  the  fel- 
low. He  reached  him  just  as  he  fired  a  third  time,  and  either 
seized  or  knocked  up  his  hand,  so  that  the  shot  went  wild,  the 
bullet  striking  the  wall  near  the  ceiling.  Mr.  Leishman  cour- 
ageously grappled  with  the  fellow,  and  while  he  was  wrestling 
with  him  for  the  revolver,  Mr.  Frick  struggled  to  his  feet  and 
grasped  his  assailant  from  behind.  In  this  way  the  three  men 
swayed  violently  to  and  fro  for  a  few  thrilling  moments,  and 
then  all  three  fell  with  a  crash  against  the  low  wall  just  under 
the  window  overlooking  Fifth  Avenue,  the  Russian  underneath. 
A  crowd,  attracted  by  the  shots,  stood  on  the  opposite  side  of 
the  street ;  and  seeing  Mr.  Frick  struggling  near  the  win- 
dow, thought  he  was  trying  to  raise  it  to  give  an  alarm,  or  to 
escape  from  some  enemy  invisible  from  the  sidewalk.  This 
occasioned  one  of  the  many  erroneous  reports  sent  out  to  the 
newspapers. 

The  fall  had  loosened  Mr.  Frick 's  grasp  of  the  fellow's  left 
arm  ;  and  while  Mr.  Leishman  still  held  on  to  the  right  hand  and 
the  revolver,  the  Russian  drew  a  dagger  made  from  an  old  file 
and  plunged  it  again  and  again  into  Mr.  Frick,  who,  bending 
over  him  and  weak  from  his  exertions  and  wounds,  was  unable  to 
avoid  the  blows.  First  the  dagger  was  thrust  into  his  hip,  just 
behind  the  head  of  the  femur;  then  it  struck  him  in  the  right 
side  and  glanced  along  one  of  the  ribs;  and  a  third  blow  tore 
open  the  left  leg  just  below  the  knee.  Despite  his  terrible  in- 
juries Mr.  Frick  again  threw  himself  on  the  ruffian,  and  finally 
pinioned  his  arm  to  the  floor.  Then  the  clerks,  who  had  watched 
the  struggle  from  the  door  as  if  spellbound,  rushed  in  and 


226  ATTEMPT   ON  MR.  PRICK 

secured  the  anarchist.  The  revolver  and  dagger  were  torn  from 
his  grasp  and  he  was  dragged  to  his  feet.  Covered  with  the 
blood  that  had  flowed  from  Mr.  Prick's  wounds,  he  was  a  sorry 
looking  object;  and  Mr.  Leishman  looked  almost  as  bad.  The 
latter,  who  had  so  bravely  seized  the  smoking  revolver  a  few 
moments  before,  and  heard  the  trigger  snap  even  a  fourth  time, 
now  collapsed  utterly,  and  had  to  be  carried  from  the  room. 
Mr.  Frick,  the  only  calm  person  present,  leaned  against  the 
desk  and  watched  the  last  ineffectual  struggles  of  the  wretch 
who  had  tried  to  kill  him. 

Thrown  at  last  into  a  chair  and  held  there,  the  Russian  ap- 
peared to  be  mumbling  something,  and  all  but  Mr.  Frick  were 
too  excited  to  notice  it.  At  this  moment  a  deputy  sheriff 
rushed  in  with  a  drawn  revolver  and  made  as  if  he  would  shoot 
the  man.  Mr.  Frick  interposed.  "  No,  don't  kill  him,"  he 
said ;  "  raise  his  head  and  let  me  see  his  face."  As  they  did  so 
it  was  seen  that  the  man's  apparent  mumbling  was  caused  by 
his  chewing  something;  and  on  his  mouth  being  forced  open, 
a  cap  containing  fulminite  of  mercury,  such  as  anarchists  had 
previously  used  to  commit  suicide,  was  found  between  the  des- 
perate fellow's  teeth.  Even  when  overcome  by  numbers,  he 
still  sought  to  carry  out  his  devilish  purpose  by  an  explosion 
which  would  involve  Mr.  Frick  and  a  dozen  innocent  men  in 
his  own  destruction. 

By  this  time  the  office  was  filled  with  an  excited  crowd.  A 
German  carpenter,  who  had  been  at  work  in  the  building,  broke 
through  the  throng  and  aimed  a  blow  at  the  Russian's  head 
with  his  hammer.  It  missed  him.  Then  arose  cries  of  "  Shoot 
him ! "  "  Lynch  him !  "  and  amid  all  the  excitement  no  one 
seemed  to  give  a  thought  to  Mr.  Frick,  who  still  stood  leaning 
against  the  desk,  with  the  blood  streaming  from  his  many 
wounds.  A  number  of  policemen  who  had  been  attracted  by 
the  noise  quickly  surrounded  the  assassin  to  protect  him,  and 
led  him  from  the  room.  Then  the  others  turned  to  Mr.  Frick. 
A  score  of  hands  hastened  to  his  support ;  and  he  was  gently 


MAGNIFICENT  COURAGE  227 

placed  on  a  lounge  in  an  inner  room,  while  hurried  calls  were 
sent  for  physicians. 

While  the  blood-sodden  clothes  were  being  removed,  and 
before  the  physicians  arrived,  Mr.  Frick  talked  calmly  about  the 
assault,  and  commented  with  a  smile  on  the  assassin's  amazing 
muscular  power;  nor  did  his  courage  fail  him  when  the  sur- 
geons began  probing  for  the  bullets.  At  first  the  doctors  said 
there  was  little  hope  of  recovery.  The  first  bullet  had  entered 
the  side  of  the  neck,  cutting  the  lobe  of  the  ear,  and  had  ranged 
backwards  and  downwards  until  it  almost  reached  the  shoulder. 
The  second  bullet  had  followed  a  similar  course,  but  from  right 
to  left. 

While  the  doctor  was  probing  in  the  wounds  Mr.  Frick 
calmly  directed  him  as  to  the  place  where  the  bullet  would  be 
found,  and  then  as  the  instrument  reached  it,  he  remarked : 
"There!  that  feels  like  it,  doctor."  And  while  the  probing, 
cutting,  and  sewing  up  of  the  wounds  were  going  on,  he  dictated 
a  cablegram  to  Mr.  Carnegie,  telling  him  that  he  was  not 
mortally  injured,  and  he  signed  several  letters  which  he  had 
previously  dictated.  He  also  completed  the  arrangements 
which  he  had  begun  earlier  in  the  day  for  a  loan;  and  signed 
all  the  necessary  papers.  The  doctors  said  that  it  was  the 
most  magnificent  exhibition  of  courage  they  had  ever  seen. 

Most  touching  of  all,  and  even  more  characteristic  of  the 
man,  was  his  manner  of  greeting  Mrs.  Frick  on  his  arrival 
home  a  few  hours  later  in  the  ambulance.  Mrs.  Frick  had  been 
critically  ill ;  and  the  excitement  of  the  Homestead  battle  had 
rendered  her  condition  precarious.  Mr.  Frick's  first  thought 
after  the  attack  was  of  his  wife;  and  he  gave  very  emphatic 
orders  that  no  alarming  reports  be  permitted  to  reach  her. 
Then  he  sent  two  of  her  relatives  who  had  hastened  to  the 
flffice  on  hearing  of  the  assault,  to  break  the  news  to  her  gently, 
and  to  let  her  understand  that  his  injuries  were  trifling.  So 
well  did  they  succeed  that,  as  Mr.  Frick  was  carried  past  her 
bedroom  door,  she  was  in  no  way  alarmed.  Telling  the  stretcher 


228  ATTEMPT  ON  MR.  FRICK 

bearers  to  turn  his  head  around  so  that  he  could  speak  to  his 
wife,  Mr.  Frick  addressed  her  by  name,  and  called  out  a  cheery 
inquiry  after  the  youngest  child.  Then  he  assured  her  that  he 
was  not  seriously  hurt  and  would  be  in  to  see  her  before  very 
long. 

The  fanatic  who  made  this  ferocious  attempt  on  Mr.  Prick's 
life  had  nothing  to  do  with  the  strikers.  He  was  of  the  usual 
type  of  European  anarchist ;  and  he  had  been  only  a  few  years 
in  the  country.  He  went  from  New  York  to  Pittsburg  specially 
to  kill  Mr.  Frick.  When  asked  why  he  selected  Mr.  Frick  in 
particular,  he  exclaimed  in  astonishment :  u  Why,  what  would 
the  company  do  without  Mr.  Frick  ?  Carnegie  is  thousands  of 
miles  away,  and  he  would  not  dare  to  oppose  the  men  as  Frick 
has  done."  So  here  again  was  an  echo  of  Carnegie  idealism. 
As  for  the  undiscriminating  criminal  himself,  he  was  sentenced 
to  twenty-one  years  in  the  penitentiary  for  the  assault,  and  one 
year  in  the  workhouse  for  carrying  concealed  weapons. 

The  news  of  the  attempted  assassination  created  intense  ex- 
citement at  Homestead,  where  it  was  bulletined  a  few  minutes 
after  the  occurrence.  Crowds  gathered  at  every  street  corner 
and  in  front  of  the  telegraph  stations  and  newspaper  offices ; 
and  whenever  a  man  received  a  message  hundreds  crowded 
around  him  to  hear  the  latest  news.  The  strikers  heard  of  the 
attempt  with  mixed  feelings.  The  more  ignorant  workmen 
rejoiced  openly.  "  Frick's  dead  by  this  time  and  we've  won 
the  strike,"  shouted  one.  "  The  Carnegie  Company  don't  amount 
to  shucks  without  Frick,"  commented  another,  as  he  joyfully 
predicted  the  early  collapse  of  the  firm's  resistance.  But  at  the 
headquarters  of  the  labor-union  the  news  was  received  with  dis- 
may. While  the  leaders  believed  the  strikers  blameless  of  this 
particular  horror,  there  already  had  been  so  much  to  set  the 
public  against  them  that  they  feared  the  discredit  of  this  fresh 
act  of  violence  would  fall  on  them.  And  their  alarm  was  jus- 
tified. From  one  end  of  the  country  to  the  other,  and  across 
the  oceans  from  distant  lands,  swept  a  wave  of  fierce  indigna- 


THE  ROGUE'S  MARCH  229 

tion  against  the  strikers  and  denunciation  of  their  methods. 
Innocent  of  this  particular  crime,  the  strikers  had  to  bear  the 
disgrace  of  it. 

On  Mr.  Frick  himself  the  incident  seemed  to  have  no  effect 
except  for  the  pain  and  inconvenience  it  occasioned.  His  sorely 
wounded  body  suffered ;  but  while  nurses  and  attendants  were 
prostrate  under  the  intense  heat  of  July,  the  patient  made  no 
complaint.  From  the  first  day  he  insisted  on  being  kept  in- 
formed of  the  progress  of  events.  Newspapers,  letters,  and 
telegrams  were  read  to  him ;  and  he  dictated  answers  to  many 
of  the  latter.  His  grasp  on  the  strike  situation  was  never 
relaxed  for  a  moment.  No  move  was  made  by  the  men  that  was 
not  instantly  telephoned  to  him;  and  nothing  was  done  by  the 
managers  that  did  not  emanate  from  him,  or  that  was  not  previ- 
ously submitted  for  his  approval.  Except  that  the  contest  was 
now  conducted  from  Mr.  Frick's  Homewood  residence  instead 
of  from  his  Fifth  Avenue  office,  no  difference  was  to  be  seen  in 
the  situation. 

By  this  time  the  scene  of  disorder  near  Pittsburg  had  be- 
come the  centre  of  interest  for  the  whole  world.  No  other  war 
was  being  fought;  no  other  event  of  universal  interest  was 
taking  place ;  and  the  attention  of  the  people  of  every  land  was 
focussed  on  the  beautiful  spot  on  the  Monongahela  which  John 
McClure  had  so  infelicitously  named  Amity  Homestead.  In 
every  country  columns  were  daily  printed  describing  the  hap- 
penings at  the  works  and  the  military  camp ;  and  imaginary 
scenes  at  the  bedside  of  Mr.  Frick  found  their  way  into  news- 
papers printed  in  many  languages. 

As  if  to  keep  this  interest  from  flagging,  a  young  soldier 
in  the  camp  called  for  three  cheers  for  Frick's  assassin.  His 
outraged  commander  immediately  had  him  triced  by  the  thumbs 
to  a  tent-pole  and  then  drummed  him,  with  his  head  half  shaved, 
out  of  camp  to  the  tune  of  the  Rogue's  March.  The  fellow  had 
swallowed  some  tobacco  juice  while  undergoing  his  punishment, 
and  this  had  made  him  sick.  So  the  sensation-loving  journals 


230  ATTEMPT   ON  MR.  PRICK 

exploited  the  incident  as  a  brutal  punishment ;  and  this  ran 
round  the  world  as  a  valuable  item  of  news. 

There  was  one  spot,  however,  where  these  items  of  news 
did  not  readily  penetrate;  and  that  was  Rannoch  Lodge,  on 
beautiful  Loch  Rannoch.  Here,  thirty-five  miles  from  the 
nearest  railway  and  telegraph  station,  Andrew  Carnegie,  in  ac- 
cordance with  plans  previously  made,  denied  himself  to  report- 
ers and  refused  to  answer  telegrams  or  letters  relating  in  any 
way  to  Homestead.  Having  delegated  his  authority  to  Mr. 
Frick,  he  knew  that  the  measures  they  had  jointly  planned 
would  be  carried  out  to  the  letter,  despite  the  efforts  of  anarch- 
ists or  the  protests  of  politicians  of  a  less  ruddy  hue.  And  so 
he  went  fishing;  and  the  London  papers  sought  in  vain  to  get 
an  expression  of  opinion  from  him  either  on  the  Homestead 
battle  or  the  attempt  on  Mr.  Prick's  life. 

In  the  account  of  the  Homestead  strike  which  Mr.  W.  T. 
Stead  published  in  1900,  after,  as  he  claims,  "talking  on  the 
subject  with  Mr.  Carnegie  this  autumn,"  he  repeats  the  story 
that  the  labor  leaders  "  had  applied  to  Mr.  Frick  for  Mr.  Car- 
negie's address  in  order  to  telegraph  him — Mr.  Carnegie  being 
at  that  time  absent  in  Scotland,  and  his  address  not  being 
known  to  any  one  in  this  country  except  his  business  associates. 
Mr.  Frick  refused  to  give  the  address;  whereupon  Mr.  Reid 
obtained  it  from  our  Consul- General  in  London,  John  C. 
New,  and  then  cabled  Mr.  Carnegie,  in  which  he  accepted 
the  terms  proposed  by  Mr.  O'Donnell,  and  urged  that  Mr. 
Frick  be  seen  immediately  with  a  view  to  effecting  the  settle- 
ment." 

This  statement  is  so  incoherent  that  it  is  not  clear  who 
"accepted  the  terms  proposed  by  Mr.  O'Donnell."  The  idea 
sought  to  be  conveyed  is  that  it  was  Mr.  Carnegie  who  ac- 
cepted the  terms  of  the  strikers,  since  no  one  else  mentioned  in 
this  strange  narrative  had  anything  to  accept.  To  make  this 
matter  clear  once  for  all  Mr.  Carnegie's  cablegrams  are  here 
given  as  received  in  Pittsburg: 


CARNEGIE'S   CABLEGRAMS  231 

RANNOCH,  July  28,  1892. 

We  have  telegram  from  Tribune  Reid  through  high  official 
London  Amalgamated  Association  reference  Homestead  Steel 
Works.  The  proposition  is  worthy  of  consideration.  Replied 
"nothing  can  be  done.  Send  H.  C.  Frick  document. "  You 
must  decide  without  delay.  Amalgamated  Association  evidently 
distressed.  * 

The  next  day  this  was  modified  by  the  following : 

RANNOCH,  July  29,  1892. 

After  due  consideration  we  have  concluded  Tribune  too  old. 
Probably  the  proposition  is  not  worthy  of  consideration.  Use- 
ful showing  distress  of  Amalgamated  Association.  Use  your 
own  discretion  about  terms  and  starting.  George  Lauder, 
Henry  Phipps  Jr.,  Andrew  Carnegie  solid.  H.  C.  Frick  forever ! 

And  in  his  answer  to  Mr.  Whitelaw  Reid,  Mr.  Carnegie 
cabled  that  no  compromise  would  be  considered  by  him,  and 
that  he  would  rather  see  grass  growing  over  the  Homestead 
works  than  advise  Mr.  Frick  to  yield  to  the  strikers. 

The  rest  of  the  story  quoted  by  Stead  is  fairly  accurate. 
"  Mr.  Frick  was  obdurate.  He  refused  to  consider  the  matter 
at  all,  denounced  the  strikers  as  assassins,  and  declared  that  if 
Carnegie  came  in  person,  in  company  with  President  Harrison 
and  the  entire  Cabinet,  he  would  not  settle  the  strike." 

In  regard  to  Stead's  complaint  that  Mr.  Carnegie's  address 
in  Scotland  was  not  given  to  the  strikers,  he  should  have  known, 
after  he  had  "talked  on  the  subject  with  Mr.  Carnegie  this 
autumn,"  that  the  latter  had  selected  such  an  out-of-the-way 
residence  as  Rannoch  Lodge  for  the  very  purpose  of  eluding 
the  appeals  of  the  workmen  which  it  was  foreseen  his  speeches 
and  writings  would  call  forth.  And  his  silence  during  all  the 
exciting  happenings  at  Homestead  was  in  accordance  with  plans 
made  long  before. 

Mr.  Carnegie's  consistency  at  this  time  provoked  much  com- 
ment. Two  days  after  the  assault  on  Mr.  Frick,  the  St.  James' 
Gazette  reported  that  "  Mr.  Carnegie  has  preserved  the  same 


232  ATTEMPT  ON  MR.   FRICK 

moody  silence  towards  all  the  members  of  the  American  Lega- 
tion here ;  and  all  other  persons  in  London  with  whom  he  is 
usually  in  communication  have  not  heard  a  word  from  him  since 
the  beginning  of  the  troubles  at  Homestead."  The  publica- 
tion went  on  to  say  that  "  the  news  of  the  shooting  of  Mr.  Frick 
has  intensified  the  feeling  of  all  classes  against  Mr.  Carnegie. 
A  large  meeting  of  the  labor  representative  leagues  was  held  in 
this  city  yesterday,  at  which  a  resolution  was  adopted  strongly 
condemning  the  course  of  Mr.  Carnegie  in  regard  to  the  Home- 
stead troubles.  The  resolution  added  that  should  Mr.  Carnegie 
insult  British  workmen  by  further  philanthropic  efforts  in  their 
behalf,  it  was  hoped  that  they  would  show  their  detestation  of 
him  by  contemptuously  refusing  to  accept  any  offers  of  help 
from  him." 

Now  became  prominent  the  contrast  between  Mr.  Carnegie's 
idealistic  utterances  and  the  doings  at  Homestead.  News- 
papers in  every  country  and  of  every  political  color  drew  atten- 
tion to  the  startling  discrepancy;  and  not  a  few  of  them  saw  in 
the  violence  of  the  strikers  the  logical  outcome  of  the  Carne- 
gie commandment :  "Thou  shalt  not  take  thy  neighbor's  job." 
The  host  of  critics,  that  arose  with  angry  clamor,  discovered 
in  Mr.  Carnegie's  practical  philanthropy  but  the  expression  of 
an  unmitigated  egotism;  and  many  brutal  and  insensate  taunts 
were  flung  at  him  as  he  lay  silent  and  self-contained  in  his 
Highland  shooting-lodge.  It  was  altogether  a  pitiful  exhibi- 
tion. Even  the  London  Times  could  not  forego  the  chance  to 
fling  a  sneer.  Commenting  on  the  assault  on  Mr.  Frick,  the 
writer  concludes  his  editorial  thus : 

"  Mr.  Carnegie's  position  is  singular.  The  avowed  cham- 
pion of  trades-unions  now  finds  himself  in  almost  ruinous  con- 
flict with  the  representatives  of  his  own  views.  He  has  prob- 
ably by  this  time  seen  cause  to  modify  his  praise  of  unionism 
and  the  sweet  reasonableness  of  its  leaders.  Or,  are  we  to  as- 
sume that  this  doctrine  is  true  in  Glasgow  but  not  in  the  United 
States,  or  that  it  ceases  to  be  applicable  the  moment  Mr.  Car- 
negie's interests  are  touched?  " 


OUTBURST   OF  PUBLIC  ANGER  233 

A  day  or  two  later  the  representative  of  the  Associated 
Press  reported  that  he  had  driven  from  Kingussie  to  Rannoch 
Lodge,  "  and  made  repeated  efforts  to  obtain  an  interview  with 
Mr.  Carnegie  in  order  to  obtain  a  statement  from  him  of  his 
views  regarding  the  troubles  at  Homestead,  Pa.,  and  more  espe- 
cially concerning  the  shooting  of  H.  C.  Frick, "  but  "his  mis- 
sion then  proved  fruitless.  This  morning,  however,  he  was 
more  successful,"  and  Mr.  Carnegie,  "after  persistent  inter- 
rogation by  the  caller,  finally  said,  'Well,  I  authorize  you  to 
make  the  following  statement :  I  have  not  attended  to  business 
for  the  past  three  years,  but  I  have  implicit  confidence  in  those 
who  are  managing  the  mills.  Further  than  that  I  have  nothing 
to  say.'  " 

The  storm  raised  by  the  publication  of  this  short  interview 
proved  how  wise  Mr.  Carnegie  had  been  in  previously  saying 
nothing.  The  tide  of  sympathy,  which  had  swept  from  the 
strikers,  now  returned  to  them ;  and  municipal  bodies,  work- 
men's unions,  political  clubs,  vied  with  preachers,  lecturers,  and 
editors  in  England  and  America  in  fierce  denunciation  of  one 
whose  acts,  it  was  said,  "  conform  so  little  to  his  verbal  utter- 
ances." Some  of  these  expressions  of  contempt  and  hatred  were 
puerile  and  stupid  in  their  violence.  "  Count  no  man  happy 
until  he  is  dead,"  wrote  the  St.  Louis  Post- Dispatch.  "Three 
months  ago  Andrew  Carnegie  was  a  man  to  be  envied.  To-day 
he  is  an  object  of  mingled  pity  and  contempt.  In  the  estima- 
tion of  nine-tenths  of  the  thinking  people  on  both  sides  of  the 
ocean  he  has  not  only  given  the  lie  to  all  his  antecedents,  but 
confessed  himself  a  moral  coward.  One  would  naturally  sup- 
pose that  if  he  had  a  grain  of  consistency,  not  to  say  decency, 
in  his  composition,  he  would  favor  rather  than  oppose  the  or- 
ganization of  trades-unions  among  his  own  working  people  at 
Homestead.  One  would  naturally  suppose  that  if  he  had  a  grain 
of  manhood,  not  to  say  courage,  in  his  composition,  he  would 
at  least  have  been  willing  to  face  the  consequences  of  his  incon- 
sistency. But  what  does  Carnegie  do  ?  Runs  off  to  Scotland 


234 


ATTEMPT   ON  MR.   FRICK 


out  of  harm's  way  to  await  the  issue  of  the  battle  he  was  too 
pusillanimous  to  share.  A  single  word  from  him  might  have 
saved  the  bloodshed — but  the  word  was  never  spoken.  Nor  has 
he,  from  that  bloody  day  until  this,  said  anything  except  that 
he  'had  implicit  confidence  in  the  managers  of  the  mills.'  The 
correspondent  who  finally  obtained  this  valuable  information, 
expresses  the  opinion  that  'Mr.  Carnegie  has  no  intention  of 
returning  to  America  at  present.'  He  might  have  added  that 
America  can  well  spare  Mr.  Carnegie.  Ten  thousand  'Carnegie 
Public  Libraries '  would  rot  compensate  the  country  for  the 

direct  and    indirect  evils  re- 
sulting from  the  Homestead 
lockout.     Say  what  you  will 
of  Frick,  he  is  a  brave  man. 
Say  what  you   will    of    Car- 
negie, he  is  a  coward.     And 
gods  and  men  hate  cowards." 
In  spite   of   the  outward 
show   of   indifference  with  which 
Mr.  Carnegie  received  these  vicious 
attacks,  his  sensitive  soul  suffered 
T?:.  keenly.      He    afterwards    told    a    repre- 

sentative of  the  Associated  Press  that 
"the  deplorable  events  at  Homestead 
had  burst  upon  him  like  a  thunderbolt  from  a  clear  sky.  They 
had  such  a  depressing  effect  upon  him  that  he  had  to  lay  his 
book  aside  and  resort  to  the  lochs  and  moors,  fishing  from  morn- 
ing to  night." 

Meanwhile  Mr.  Frick,  propped  up  in  bed,  and  swathed  in 
bandages,  daily  received  the  reports  of  the  managers  of  the  dif- 
ferent works,  dictated  replies  to  letters  and  telegrams,  and 
allowed  neither  bodily  pain  nor  a  domestic  bereavement  to 
slacken  his  grasp  of  the  situation.  On  Friday,  August  5th, 
thirteen  days  after  the  attempt  on  his  life,  he  astonished  his 
business  associates  by  suddenly  walking  into  the  office  as  if 


'Fishing  from  morning  to 
night." 


MR.  PRICK'S   RETURN  235 

nothing  had  happened.  He  left  his  home  unattended,  entered 
a  street  car,  and  without  fuss  or  ceremony  returned  to  the  office 
and  took  his  seat  at  his  desk.  It  was  characteristic  of  the 
man's  simplicity.  The  previous  day  he  had  attended  the  funeral 
of  his  youngest  child,  born  in  the  midst  of  this  excitement  and 
dead  because  of  it.  The  mother's  life  was  almost  involved  in 
the  sacrifice. 


CHAPTER    XVI 
THE   AFTERMATH   OF   WAR 

UNDER  the  protection  of  the  state 
militia,  workmen  willing  to  accept 
the  wages  which  the  strikers  re- 
fused were  at  once  introduced  into 
the  deserted  mills.  Major-General 
Snowden,  who  was  in  command  of 
the  troops,  took  a  firm  hold  of  the 
situation  the  moment  he  arrived;  and  open 
defiance  of  law  and  order  ceased  at  the  sound 
of  the  first  bugle-call.  The  impression  had 
gone  abroad  among  the  strikers  that  the 
militia  had  come  to  prevent  the  landing  of  more  Pinkertons. 
The  illusion  was  dispelled  in  a  single  sentence  of  the  com- 
mander:  "The  gates  are  open.  Any  one  may  go  in  if  the 
company  permits  it."  In  three  days  a  hundred  men  were  at 
work;  in  two  weeks  nearly  a  thousand  were  inside  the  mill,  and 
one  of  the  regiments  had  left  for  home. 

With  the  fatuity  that  had  characterized  the  actions  of  the 
Amalgamated  Association  from  the  outset,  a  sympathetic  strike 
was  now  ordered  in  the  other  Carnegie  works.  Although  the 
scale  had  been  signed  at  the  Upper  and  Lower  Union  Mills  and 
at  Beaver  Falls,  the  men  at  these  establishments  broke  their 
agreement  on  July  1 4th,  and  left  the  mills  in  a  body.  Super- 
intendent Dillon  had  both  the  Pittsburg  mills  running  full  with 
non-union  labor  within  four  weeks ;  and  the  unprofitable  enter- 
prise at  Beaver  Falls  was  allowed  to  remain  idle  for  several 

months.     Thus    the  Amalgamated    Association    unnecessarily 

236 


AN  INDUSTRIAL    STORM-CENTRE 


237 


lost  three  more  mills  at  a  time  when  it  was  fighting  for  its  very 
existence. 

The  newspaper  files  of  that  period  show  that  the  industrial 
storm-centre  at  Homestead  still  held  the  attention  of  the  world. 
At  Little  Rock,  on  July  i6th,  Carnegie  was  burnt  in  effigy. 
The  same  day  the  London  Echo,  once  owned  by  Andrew  Car- 
negie, demanded  explanations  of  him  as  to  the  report  that  he 
had  "  fortified  his  works  with  barbed  and  electrically  charged 


Military  camp  overlooking  the  Homestead  Works. 

wire."  The  London  Financial  Observer  of  the  same  date 
preached  a  sermon  on  the  text  of  Nero  fiddling  while  Rome  was 
burning. 

"  Here  we  have  this  Scotch- Yankee  plutocrat  meandering 
through  Scotland  in  a  four-in-hand,  opening  public  libraries 
and  receiving  the  freedom  of  cities,  while  the  wretched  Belgian 
and  Italian  workmen  who  sweat  themselves  in  order  to  supply 
him  with  the  ways  and  means  for  his  self-glorification  are  starv- 
ing in  Pittsburg." 

Pittsburg  newspapers  at  the  same  time  were  gravely  discuss- 
ing the  advisability  of  refusing  Mr.  Carnegie's  recent  gift  of 
money  for  a  library ;  and  in  both  chambers  of  the  American 
Congress  denunciations  of  Frick,  Carnegie,  and  Pinkerton  were 
freely  uttered.  The  world  seemed  topsy-turvy ;  and  the  strange 
doctrine  that  the  strikers  had  a  natural  right  to  work  in  the 


238  THE  AFTERMATH  OF    WAR 

Carnegie  mills  at  wages  fixed  by  themselves  was  voiced  in  a 
hundred  different  forms.  In  some  cases  sympathy  with  the 
strikers  took  a  practical  form ;  as  when  the  Fairport  Fishing 
Company  of  Ashtabula  offered  them  "  2,000  pounds  of  fresh  or 
salt  fish."  A  day  later  a  Chicago  bishop  joined  the  Financial 
Times  of  London  in  abusing  "Czar  Carnegie." 

On  the  1 9th  warrants  were  issued  for  the  arrest  of  the  prin- 
cipal leaders  of  the  riot  on  a  charge  of  murder;  and  the  news- 
papers simultaneously  reported  that  Mr.  Dillon  had  800  men 
at  work  in  the  Union  Mills.  The  same  day  a  special  commit- 
tee appointed  by  Congress  to  investigate  the  Homestead  labor 
troubles  held  its  first  meeting ;  and  work  was  resumed  at  the 
open-hearth  department  and  the  armor-plate  mill.  The  gov- 
ernor of  Pennsylvania  also  arrived  at  Homestead.  On  the  2Oth 
Keir  Hardie,  M.  P.,  who  had  achieved  notoriety  by  his  bad  man- 
ners and  grotesque  behavior  in  Parliament,  sent  the  strikers' 
fund  ;£ioo  which  Andrew  Carnegie  had  previously  given  him 
towards  his  election  expenses ;  and  Ben  Butler  came  out  in  an 
erudite  opinion  on  the  possibility  of  extraditing  Carnegie  on  a 
charge  of  murder.  So  laughter  followed  tears. 

On  July  22d  the  non-union  men  at  Duquesne  stopped  work 
in  sympathy  with  the  Homestead  strikers ;  but  some  of  them 
regretting  their  action  a  few  days  later,  a  little  riot  occurred 
when  they  tried  to  get  back  into  the  mill.  A  few  soldiers  were 
sent  over  from  Homestead ;  a  dozen  warrants  were  issued  for 
the  arrest  of  the  ringleaders ;  and  the  trouble  ended  in  a  pic- 
turesque man-hunt  on  the  hills  and  the  sending  of  the  mana- 
cled prisoners  to  Pittsburg.  These  men  were  all  convicted  of 
rioting. 

The  last  day  of  this  eventful  month  fell  on  Sunday.  The 
scene  in  the  works  was  thus  described  in  the  papers  next 
morning : 

"  With  for  a  church  the  biggest  mill  in  America,  boarded  by 
a  high  fence  and  a  protectorate  of  one  hundred  and  fifty  armed 
watchmen,  with  one  thousand  soldiers  in  easy  reach,  the  non- 


STEAD'S    GARBLED    STORY 


239 


union  men  in  the  Homestead  plant  gave  thanks  to  God  this 
morning.  About  four  hundred  of  the  new  men  had  gathered 
in  the  beam-mill  and  found  seats  on  rough,  improvised  benches. 
An  orchestra  from  Pittsburg  played  ' Nearer,  My  God,  to  Thee,' 
and  Chaplain  Adams  of  the  Sixteenth  Regiment,  standing  where 
the  sunshine  glistened  on  his  epaulets,  preached  a  sermon  that 


The  Sheridan  cavalry  and  the  Governor's  troop  going  to  the  rescue  of  Battery  B's 
cannon,  which  the  strikers  would  not  permit  to  be  unloaded  from  the  cars. 

—From  Harpers'  Weekly, 

touched  many  hearts,  on  a  famed  biblical  character,   Saul  of 
Tarsus." 

The  same  paper,  under  the  caption  "  Everybody  Condemned," 
tells  of  a  conference  on  the  Homestead  situation  of  the  Central 
Labor  Union  in  New  York. 

By  the  5th  of  August  fifteen  hundred  men  were  at  work  at 
Homestead ;  and  on  the  8th  the  strike  at  Duquesne  ended  in  a 
stampede  for  work  in  which  more  men  were  hurt  than  in  the 
previous  riot.  About  the  same  time  the  members  of  the  con- 
gressional committee  of  investigation  fell  out  among  themselves, 
refused  to  sign  their  chairman's  report,  the  minority  of  two  be- 


240  THE  AFTERMATH  OF    WAR 

came  the  majority,  and  of  the  other  members  each  made  a  report 
for  himself.  Thus  five  reports  were  submitted  by  the  commit- 
tee ;  and  it  is  from  one  of  these  expressions  of  individual  opin- 
ion that  Mr.  W.  T.  Stead  quotes  a  phrase  in  condemnation  of 
Mr.  Frick  which  has  since  been  embodied  in  Alderson's  author- 
ized biography  of  Andrew  Carnegie : 

"  The  Committee  of  Investigation  of  the  House  of  Repre- 
sentatives," says  Mr.  Stead,  "roundly  condemned  Mr.  Frick  and 
his  officers  for  lack  of  patience,  indulgence,  and  solicitude,  and 
they  say : — 

'Mr.  Frick  seems  to  have  been  too  stern,  brusque,  and 
somewhat  autocratic,  of  which  some  of  the  men  justly  com- 
plain. We  are  persuaded  that,  if  he  had  chosen,  an  agreement 
would  have  been  reached  between  him  and  the  workmen,  and 
all  the  trouble  which  followed  would  thus  have  been  avoided.'  ' 

This  quotation,  which,  by  the  way,  is  garbled  by  Mr.  Stead 
so  as  to  omit  a  qualifying  clause  and  to  include  an  important 
word  ("  chosen  ")  not  used  in  the  original,  expresses  the  views 
of  a  single  individual,  Mr.  Gates,  and  the  other  members  of 
the  committee  who  had  heard  the  evidence  refused  to  sign  it. 
Mr.  Stead's  conclusion  that  "Mr.  Frick,  indeed,  seems  to  have 
been  the  villain  of  the  piece  all  through  "  is  also  adopted  by 
Mr.  Carnegie's  biographer.  In  such  ways  history  is  made. 

While  the  confused  and  contradictory  reports  of  this  com- 
mittee of  investigation  contain  little  of  value,  the  testimony  of 
the  witnesses  examined  by  it  has  much  in  it  that  suggests  the 
underlying  causes  of  the  strike  and  the  violence  offered  to  the 
company's  watchmen.  As  this  is  a  matter  of  public  record  it 
need  not  be  repeated  here.  A  single  quotation  from  the  testi- 
mony of  Mr.  T.  V.  Powderly,  General  Master  Workman  of  the 
Knights  of  Labor,  will  serve  as  an  illuminating  example. 

"  Does  your  organization  countenance  the  prevention  of  non- 
union men  taking  the  place  of  striking  or  locked-out  men  ?  " 
Mr.  Powderly  was  asked. 


"  THY  NEIGHBOR'S  JOB"  241 

"  We  agree  with  Andrew  Carnegie,  'Thou  shalt  not  take  thy 
neighbor's  job,'  "  answered  the  chief  of  the  Knights  of  Labor. 

The  report  of  the  Senate  Committee  also  made  use  of  a 
quotation  from  Carnegie's  Forum  article  ending  with  the  same 
terse  commandment,  to  illustrate  the  course  which  Mr.  Frick 
ought  to  have  followed  in  his  treatment  of  the  workmen  !  Under 
all  this  censure  Mr.  Frick  remained  silent,  and  to  this  day  he 
has  never  said  a  word  either  in  explanation  or  self-defence. 

During  all  this  time  the  strikers,  overawed  by  the  militia, 
had  been  fairly  peaceable.  A  few  assaults  on  non-union  work- 
men were  made  whenever  a  small  body  of  the  latter  was  caught 
by  night  or  in  an  out-of-the-way  place ;  but  the  growing  hope- 
lessness of  their  position  now  made  some  of  the  old  workers 
desperate.  Superintendent  Potter  was  stoned  as  he  sat  on  his 
porch.  The  company's  steamer  was  fired  on  by  men  concealed 
in  a  passing  train.  The  house  of  a  "scab"  was  set  on  fire; 
and  an  attempt  was  made  to  burn  down  a  big  boarding-house 
where  non-union  men  were  lodged.  Dynamite  was  used  in  an 
attempt  to  injure  one  of  the  Union  Mills.  But  these  sporadic 
outbreaks  had  no  effect  beyond  that  of  alienating  the  sympathy 
which  the  press  and  people  of  the  country  had  so  conspicuously 
bestowed  upon  the  strikers  a  little  while  before.  A  butcher 
was  boycotted  for  supplying  the  troops  with  ice;  a  school  was 
deserted  because  the  teachers  were  the  daughters  of  an  Associa- 
tion man  who  had  wearied  of  the  strike  and  gone  back  to  work. 
The  oorough  council  was  crippled  because  the  unionists  would 
not  sit  with  the  non-unionists.  Through  it  all  the  condition  of 
the  works  was  slowly  improving;  and  day  by  day  more  men 
were  found  at  work.  By  the  third  week  in  September  more 
troops  had  been  sent  away,  and  the  strike  was  practically  a 
thing  of  the  past. 

Organized  labor,  however,  was  slow  to  acknowledge  its  de- 
feat. Up  to  this  time  the  Knights  of  Labor  had  contributed 
16 


242  THE   AFTERMATH  OF    WAR 

nothing  to  the  cause  of  the  strikers  beyond  a  voluminous  sym- 
pathy and  some  talk  of  a  general  boycott  of  Carnegie  products. 
Now,  in  the  hands  of  Master  Workman  Hugh  Dempsey  of  Dis- 
trict Assembly  No.  3,  it  brought  to  the  strikers'  aid  a  weapon 
hitherto  happily  unknown  in  American  industrial  warfare. 
This  was  poison — a  mixture  of  croton  oil  and  arsenic  varied 
with  powders  of  antimony.  The  hellish  plot  was  carefully  in- 
vestigated by  a  jury  presided  over  by  one  of  the  ablest  judges 
of  Pennsylvania ;  and  the  accused  had  the  benefit  of  counsel  of 
unquestioned  force  and  influence.  The  verdict  of  guilty,  the 
sentence  of  the  chief  criminals  to  seven  years  in  the  peniten- 
tiary, the  refusal  of  the  board  of  pardons  a  year  later  to  com- 
mute the  punishment,  may  be  taken  as  conclusive  proof  of  the 
existence  of  this  diabolical  conspiracy,  which  brought  dishonor 
to  organized  labor. 

During  September  and  October  there  was  an  alarming  num- 
ber of  dysentery  cases  among  the  non-union  men  who  got  their 
meals  inside  the  Homestead  mills ;  but  the  sickness  was  at  first 
attributed  to  bad  water,  careless  habits,  and  the  unaccustomed 
hardship  of  the  work  around  the  furnaces.  When  the  disorders 
failed  to  yield  to  the  usual  remedies,  the  doctors  began  to  sus- 
pect a  worse  condition ;  and  their  suspicions  were  strengthened 
when  the  patients  improved  under  treatment  for  antimony  pois- 
oning. Some  deaths  taking  place,  the  lesser  criminals  became 
panic-stricken,  and  hastened  to  confess  that  they  had  been 
bribed  by  Dempsey  and  an  associate  to  put  yellow  powders  into 
the  soup  and  coffee  served  to  the  workmen.  After  conviction 
one  of  these  creatures  withdrew  his  confession,  acknowledged 
perjury,  and  the  next  day  recanted  again  and  swore  that  his 
first  evidence  was  true.  It  turned  out  that  he  had  been  tempted 
into  a  fresh  conspiracy,  which  this  time  had  for  its  purpose  the 
pardon  of  the  entire  band  of  poisoners.  It  is  worthy  of  men- 
tion that  the  Knights  of  Labor  stood  by  their  fallen  official  with 
a  steadfastness  worthy  of  a  nobler  cause ;  and  despite  his  sen- 
tence to  the  penitentiary  kept  him  on  their  rolls. 


INDICTED   FOR    TREASON  243 

On  September  2ist  true  bills  were  found  against  one  hun- 
dred and  sixty-seven  participants  in  the  Homestead  battle — 
three  for  murder  and  the  rest  for  aggravated  riot  and  conspiracy. 
The  next  day  Mr.  Lovejoy,  secretary  of  the  Carnegie  Company, 
was  arrested  at  the  behest  of  the  Amalgamated  Association  on 
a  charge  of  aggravated  riot  and  assault  and  battery;  and  Mr. 
Frick  and  a  dozen  other  officials  of  the  company  were  included 
in  the  indictment. 

With  the  exception  of  three  ringleaders  of  the  rioters,  who 
were  held  on  a  murder  charge,  all  of  these  persons  were  ad- 
mitted to  bail.  The  murder  charges  duly  came  to  trial.  In 
two  cases  the  accused  had  no  difficulty  in  proving  an  alibi ;  and 
the  third,  that  of  O'Donnell,  resulted  in  an  acquittal.  Nine 
months  later  the  cases  against  the  Carnegie  officials  were 
dropped ;  and  the  same  day  an  order  of  court  was  issued  releas- 
ing from  bail  the  strikers  who  were  under  indictment.  Fifty- 
seven  men  in  all  had  been  arrested,  of  whom  thirty-three  were 
indicted  for  treason — the  first  cases  of  the  kind  in  the  history 
of  the  commonwealth — twenty-one  for  rioting,  and  three  for 
murder. 

On  October  I3th,  after  ninety-five  days'  service,  the  last  of 
the  soldiers  left  Homestead ;  and  their  withdrawal  was  at  once 
followed  by  a  recrudescence  of  violence.  At  this  time  the 
situation  was  as  follows  :  Over  two  thousand  workmen  were  in 
the  mill,  among  whom  were  about  two  hundred  of  the  former 
employees.  A  number  of  skilled  workmen  from  Braddock, 
Duquesne,  Pittsburg,  and  other  places  were  among  the  non- 
union workmen.  From  clay  to  day  additions  were  being  made 
to  the  forces  in  the  mill,  a  limited  number  of  them  being 
Homestead  men.  The  non-union  men  lived  in  and  about  the 
works.  Business  men  of  the  borough  generally  admitted  that 
the  strike  was  lost  to  the  Amalgamated  Association.  On  the 
other  hand,  between  two  and  three  thousand  idle  workmen 
walked  the  streets,  anxious,  angry,  or  despairing;  and  in  hun- 
dreds of  homes  near  by,  wives  and  mothers  saw  with  dread  the 


244  THE   AFTERMATH  OF    WAR 

approach  of  a  winter  of  suffering.  Yet,  obedient  to  the  clique 
that  ruled  the  local  lodges  of  the  Association,  these  poor  people 
watched  strangers  coming  in,  singly  and  by  dozens,  to  take 
away  their  only  chance  of  keeping  their  little  home  together. 
Here  was  "  the  terrible  temptation  "  to  violence  which  Andrew 
Carnegie  wrote  about  in  the  Forum  ;  and  many  of  them  yielded 
to  it.  Assaults  on  the  new  workmen  became  more  frequent 
than  ever;  and  even  murder  was  done.  Every  day  brought  its 
story  of  outrage.  Within  two  weeks  of  the  withdrawal  of  the 
militia  a  new  reign  of  terror  had  set  in ;  and  for  their  own  de- 
fence many  of  the  new  workmen  were  sworn  in  as  deputy  sheriffs. 
At  the  same  time  a  ringing  protest  against  the  prevailing  out- 
lawry was  voiced  at  a  public  meeting  of  the  peaceful  citizens  of 
Homestead,  but  with  little  avail.  The  violence  lasted  as  long 
as  the  strike  had  an  official  existence.  One  was  born  of  the 
other,  lived  with  and  by  it,  and  could  not  die  alone. 

In  the  mean  time  many  letters  and  cablegrams  were  received 
from  Mr.  Carnegie  of  the  same  tenor  as  those  previously  quoted. 
A  paragraph  from  one  of  these,  sent  early  in  October,  has  some 
bearing  on  Mr.  Stead's  unfair  statement  that  "  the  responsibility 
for  the  industrial  war  at  Homestead  lies  upon  Mr.  Frick  and 
Mr.  Frick  alone."  It  is  quoted  in  the  following  letter: 

October  I2th,  1892. 
MY  DEAR  MR.    CARNEGIE  : 

I  quote  from  a  personal  note  received  from  you  as  follows : 
"  This  fight  is  too  much  against  our  Chairman ;  partakes  of 
personal  issue.      It  is  very  bad  indeed  for  you — very,  and  also 
bad  for  the  interests  of  the  firm."     ..... 

"  There  is  another  point  which  troubles  me  on  your  account, 
the  danger  that  the  public,  and  hence  all  our  men,  get  the  im- 
pression that  it  is  all  Frick.  Your  influence  for  good  would 
be  permanently  impaired.  You  don't  deserve  a  bad  name,  but 
then  one  is  sometimes  wrongly  got.  Your  partners  should  be 
as  much  identified  with  this  struggle  as  you.  Think  over  this 
counsel.  It  is  from  a  very  wise  man,  as  you  know,  and  a  true 
friend." 


CARNEGIE'S   SOLICITUDE  245 

I  am  at  a  little  loss  to  know  just  why  you  should  express 
yourself  so.  1  know  it  is  not  from  any  other  than  a  friendly 
interest,  but,  as  you  should  know,  it  seems  to  me  that  I  am 
particularly  anxious  that  no  action  of  mine  should  under  any 
circumstances  cause  loss  of  any  kind  to  the  firm,  and  that  I  am 
not  naturally  inclined  to  push  myself  into  prominence  under 
any  circumstances.  It  seems  to  me  wherever  it  was  possible  to 
put  any  of  our  people  forward  I  have  not  let  the  opportunity  go 
by.  That  is  to  say,  when  they  have  been  asked  by  any  one 
whether  some  arrangement  could  not  be  made  by  which  this 
thing  could  be  fixed  up  they  have  had  instructions  to  reply,  on 
their  own  responsibility,  that  we  could  not  under  any  circum- 
stances agree  to  a  compromise  of  any  kind ;  that  we  held  no 
resentments  against  any  of  our  old  men ;  that  we  did  not  care 
whether  they  belonged  to  a  union  or  not,  but  that  we  would 
expect,  if  they  wished  to  re-enter  our  employment,  that  they 
would  apply  as  individuals,  and  if  their  positions  were  filled  they 
would  be  offered  other  ones,  provided  they  had  not  been  guilty 
of  violating  the  law  &c.  &c.,  and  I  think  whenever  any  of  our 
people  here  have  had  such  an  opportunity  presented  to  them 
that  they  have  most  promptly  acted,  and  thus  identified  them- 
selves with  the  struggle. 

I  note  the  counsel  you  give,  but  I  cannot  see  wherein  I  can 
profit  by  it,  or  what  action  could  be  taken  by  me  that  would 
change  matters  in  respect  to  that  which  you  mention. 

Yours  truly, 

H.  C.  FRICK. 

To  Andrew  Carnegie,  Esq., 
care  Messrs.  J.  S.  Morgan  &  Co., 
London,  England. 

A  wise  move  was  made  about  this  time  by  Mr.  Frick.  He 
brought  Mr.  Charles  M.  Schwab  from  the  Edgar  Thomson 
works,  and  made  him  superintendent  of  Homestead  in  place  of 
Mr.  Potter,  whom  he  promoted  to  the  position  of  consulting 
engineer  of  all  the  Carnegie  works.  Mr.  Schwab  had  graduated 
at  Braddock  under  Captain  Jones,  and,  displaying  exceptional 
ability  as  a  manager  of  men,  had  quickly  won  his  way  from  one 
of  the  lowest  positions  in  the  yards  to  the  highest  in  the  office. 
His  cheery  friendliness  made  him  especially  popular  among  the 


246 


THE   AFTERMATH   OF    WAR 


workmen ;  and  he  had  many  admirers  among  the  strikers  at 
Homestead.  Tactful  and  conciliatory,  he  at  once  set  himself 
to  win  back  the  heads  of  departments  and  foremen ;  and  before 
many  days  had  passed  had  secured  the  best  of  them.  The 

immediate      consequence     was 

that   better  work  was    done 

,AW  inside  the  shops,  and  the 

foremen   were    soon 

.   :i^'C  -4^fc  followed     into     the 

works  by  their  fav- 

«  I  I  orites     among     the 

strikers. 

Meanwhile, 
around    the     Union 

,(£.-  '       'j~  ^nSjOfr  .  Iron     Mills    and    at 

Beaver  Falls,  some 
thousands  of  other 
workmen  walked  the 
streets  in  idleness, 


with  feelings  of  anger  and 

fear  of  the  future,  because 

of   their   sympathy   with    the 

men     of    Homestead.       This 

was  the  aftermath  of  war. 


"At  bonny  Ayr." 


During  this  eventful  Octo- 

ber, when  the  dead  leaves  were  fluttering  from  the  trees  at 
Homestead,  with  dire  whisperings  of  a  winter  of  suffering  for 
the  strikers  and  their  families,  Andrew  Carnegie  was  at  bonny 
Ayr,  the  birthplace  of  Burns,  where  another  library  was  being 
dedicated,  with  dinners,  speeches,  poems,  and  processions.  A 
local  bard  on  this  occasion  burst  into  song: 

"  Independent  and  valiant  from  childhood  to  age  — 
To  pretence  meeting  scorn,  to  unrighteousness  rage  — 
In  Carnegie  '  the  man  and  the  brother  '  we  see 
Whom,   '  for  a'  that  and  a'  that  '  Burns  sang  with  such  glee." 


THE   REPUBLICAN  DEBACLE 


247 


And  simultaneously  another  poet,  in  distant  Winona,  sang  in 
tuneful  prophecy : 

;<  The  mills  of  the  gods  grind  slowly, 

And  they  grind  exceeding  fine  ; 
And  in  the  ides  of  November 

You'll  find  us  all  in  line. 
Our  bullets  made  of  paper, 

We'll  plunk  them  in  so  hot 
That  the  G.  O.  P.  will  wonder 

If  they  ever  were  in  the  plot. 

For  we  are  the  people  and 

We'll  occupy  the  land 
In  spite  of  the  Carnegies' 

Or  Pinkerton's  brigands." 

In  grace  of  diction,  such  as  it  is,  the  disciple  of  Burns  has 
the  advantage ;  but  for  blunt  truth-speaking,  he  of  Minnesota 
takes  the  palm.  For  the  Homestead  battle  became  a  national 
issue  in  the  presidential  election  a  month  later,  and  brought 
defeat  to  the  Republican  hosts.  This  was  another  of  the 
sheaves  gleaned  from  the  crop  sown 
on  July  6th.  One  of  the  disap- 
pointed leaders — General  Grosvenor 
of  Ohio — stigmatized  Mr.  Carnegie 
as  "the  arch-sneak  of  this  age," 
a  judgment  which  Chauncey  Depew 
ungraciously  refused  to  reverse 
when  it  was  submitted  to  him.  "  As 
a  matter  of  fact,"  replied  Mr.  De- 
pew,  "  the  Homestead  strike  was 
one  of  the  most  important  factors 
in  the  presidential  contest,  and  led 
to  a  distinct  issue  in  the  campaign. 
It  happened  at  a  crisis  and  injured 
us  irremediably.  .  .  .  The  Repub- 
lican leaders  attempted  early  in  the 
campaign  to  have  the  strike  settled  and  cabled  to  Mr.  Carnegie 
direct  without  consulting  Mr.  Frick.  Every  inducement  was 


"I  TOO  KNOW  A  GOOD  THING!" 

On  the  wall  is  a  copy  of  Andrew 
Carnegie's  congratulatory  tele- 
gram to  President  Harrison  on 
his  second  nomination  :  "The  pub- 
lic knows  a  good  thing  when  it 
sees  it." 

—From  the  Chicago  Times. 


248 


THE   AFTERMATH  OF    WAR 


made  to  bring  Mr.  Carnegie  into  the  canvass,  but  he  persistently 
declined  to  lend  his  influence  or  to  pay  one  dollar  to  the  cam- 
paign fund. " 

Another  Republican  leader  was  quoted  by  the  New  York 
Times  as  saying : 

"  Carnegie  four  years  ago  was  the  best  friend  the  Republican 
party  apparently  had.  His  contributions  were  heavy  and  spon- 
taneous. The  Fifty-first  Congress  gave  him  all  the  protection 
he  needed.  By  this  legislation  he  increased  his  profits  fifty  per 


An  Ami- Harrison  cartoon,  with  Mr.  Frick  represented  as  bringing  on  his  head  the 
tribute  he  never  paid. 

cent.  The  Homestead  strike  happened  at  the  very  worst  mo- 
ment for  the  Republican  party.  Every  argument  was  used  to 
Frick  and  Carnegie  to  end  it." 

President  Harrison  naturally  expressed  himself  more  cau- 
tiously; but  he  nevertheless  ascribed  his  defeat  to  the  discon- 
tent and  passion  of  the  workingmen  growing  out  of  wages  or 
other  labor  disturbances,  which  did  not  permit  of  that  calm 
consideration  by  these  workmen  of  the  effect  of  the  protective 
system  upon  his  wages.  His  exact  words  were : 


VIEWS   OF  POLITICIANS 


249 


"The  facts  that  his  [the  workman's]  wages  were  the  highest 
paid  in  like  callings  in  the  world,  and  that  a  maintenance  of 
this  rate  of  wages,  in  the  absence  of  protective  duties  upon  the 
product  of  his  labor,  was  impossible,  were  obscured  by  the  pas- 
sion evoked  by  these  contests." 

It  is  also  certain  that  the  farming  vote  was  adversely  affected 
by  the  broadcast  publication  of  the  high  wages  received  by  the 
Homestead  workmen  under  a  protective  regime  which  left  the 


CHARGE   OF  THE   MERCENARIES. 

Mr.  Frick  is  represented  in  the  lead,  with  Mr.  Carnegie  following. 

—From  the  New  York  World. 

agriculturist  on  the  outside.  And  so  the  Democrats  rode  into 
place  on  the  Pinkerton  barges;  and  the  names  of  Frick  and 
Carnegie  became  anathema  maranatha  to  all  good  Republicans. 
It  was  a  most  unexpected  aftermath. 

For  a  few  weeks  longer  the  stubborn  contest  continued  at 
Homestead,  needlessly  prolonging  the  suffering  of  the  men 
and  their  families  and  breeding  disorder  in  the  township.  One 
of  the  unhappy  men  was  "goaded  to  suicide,"  as  the  newspapers 


250 


THE  AFTERMATH   OF    WAR 


expressed  it.  He  had  had  no  work  since  the  strike.  Before 
that  he  owned  his  home  and  had  a  well-paid  position.  His 
wife,  "  momentarily  expecting  to  become  the  mother  of  a  second 
child,"  was  in  "a  most  critical  condition  and  may  not  recover." 
Amid  such  happenings  the  public  disorder  was  such  as  to 
lead  to  a  demand  for  a  return  of  the  troops.  Happily  this  met 
with  no  response;  and  on  November  i8th  there  was  such  a 

rush  among  the  strikers  for  work 
that  men  were  trampled  in  the 
crowd.  Three  days  later  the  strike 
was  reluctantly  called  off  by  the 
local  lodges  of  the  Amalgamated 
Association;  and  the  three  thous- 
and workmen  who  had  never  be- 
longed to  the  union,  and  had  no 
rights  of  any  kind  in  it,  were  per- 
mitted to  seek  work  in  the  mill  on 
any  terms  they  could  get.  The 
struggle  had  lasted  twenty  weeks, 
had  cost  a  score  of  lives,  millions 
of  dollars,  and,  so  far  as  any  one  could  then  see,  had  benefited 
nobody. 

With  the  perspective  afforded  by  lapse  of  time,  however,  it 
can  now  be  seen  that  this  titanic  struggle  was  not  in  vain. 
Greatly  as  the  suffering  attending  it  must  be  deplored — suffer- 
ing that  ceased  not  with  the  official  declaration  of  peace  by  the 
Association  lodges,  but  stayed  throughout  the  winter  with  the 
families  of  many  of  the  strikers — it  is  nevertheless  evident 
that  the  marvellous  prosperity  which,  a  year  or  two  later,  fol- 
lowed this  struggle  was  made  possible  because  of  it.  The 
mental  and  moral  attitude  of  the  workmen  towards  their  em- 
ployers and  towards  other  workmen  which  found  expression  in 
the  savagery  of  the  attack  on  the  company's  watchmen,  in  the 
use  of  dynamite,  burning  oil,  and  the  wounding  of  defenceless 
prisoners,  belonged  to  a  barbaric  past,  and  was  wholly  incom- 


Unconditional  surrender  ! 
— From  the  Chicago  Times. 


HALF-WAY  DOWN  NIAGARA  251 

patible  with  modern  industrialism.  The  usurpation  of  the 
functions  of  government,  the  summary  arrest  and  punishment  of 
inoffensive  citizens,  and  the  displays  of  lawless  arrogance  by  the 
Advisory  Committee,  implied  a  misconception  of  the  mutual 
rights  and  duties  of  laborers  and  employers  which  could  only  be 
destructive  of  that  harmonious  co-operation  essential  to  prog- 
ress ;  and  thoroughly  imbued  with  false  ideas  as  the  workmen 
were,  nothing  but  the  most  drastic  measures  would  have  sufficed 
for  their  correction. 

One  of  the  most  intelligent  of  the  strikers  told  the  Senate 
committee  of  investigation  that  when  the  workmen  found  them- 
selves "  confronted  with  a  gang  of  loafers  and  cutthroats  from 
all  over  the  country,  coming  there,  as  they  thought,  to  take 
their  jobs,  why,  they  nattirally  wanted  to  go  down  and  defend 
their  homes  and  tlieir  property  and  tlieir  lives  with  force •,  if  neces- 
sary, and  that  is  the  way  the  men  felt  at  Homestead." 

Confronted  with  such  a  theory  of  the  natural  rights  of  labor, 
the  inflexibility  of  Mr.  Frick,  so  thoughtlessly  condemned  at 
the  time  and  often  since,  was  the  salvation  of  the  workmen 
themselves,  as  they  were  afterwards  among  the  first  to  admit. 
The  talk  of  compromise  with  such  ideas  was  foolish  and  inju- 
rious. There  are  some  things  that  cannot  be  compromised. 
Insurrection  Is  one  of  them.  It  is  not  possible  to  jump  half- 
way down  Niagara. 

In  January,  1893,  all  being  quiet  on  the  Monongahela,  An-    « 
drew  Carnegie  returned  from  Europe;  and  on  the  3Oth  of  that 
month  he  published  a  carefully  prepared  statement  of  his  con- 
nection with  the   Homestead  strike.     Summarized,  it  is  as  fol- 
lows : 

"  I  did  not  come  to  Pittsburg  to  rake  up,  but  to  bury,  the 
past,  of  which  I  knew  nothing.   .  .   .   For  26  years  our  concerns 
have  run  with  only  one  labor  stoppage  at  one  of  our  numerous 
works.    ...   I  desire  now,  once  for  all,  to  make  one  point  clear.  „ 
Four  years  ago  I  retired  from  active  business;   no  considera- 


252 


THE  AFTERMATH   OF    WAR 


tion  in  the  world  would  induce  me  to  return  to  it.  .  .  .  I  have 
sold  portions  of  my  interests  and  am  gradually  selling  more  to 
such  young  men  in  our  service  as  my  partners  find  possessed  of 
exceptional  ability  and  desire  to  interest  in  the  business.  I 
am  not  an  officer  of  the  company  but  only  a  shareholder. 

To  the  numerous  appeals  which  I  have  received  urging  me 
to  give  instructions  in  regard  to  recent  troubles,  I  have  paid  no 
attention,  but  to  all  these  people,  and  to  any  others  interested 


THE  PITTSBURG  PRESS. 


IN  HUMANITY'S  NAME. 


The  Press  Appeals  for  Aid    for    ; 
Suffering  Homestead. 


IXTREME  DESTITUTION  IN  THE  UNFORTUNATE  BOROUGH. 


What  the  Investigation  of  a  Press  Re- 
porter Revealed. 


WOMEN    AND    CHILDREN   WHO    WANT   FOR  BREAD 


The  Work  of  Relief  Far  Greater  Than  the  Local 
Committee  Can  Undertake. 


PRIDE  SEALS  THE  LIPS  OF  STARVING  MEN  AND  WOMEN 


The  Frees  Starts  the  Relief  Fund  With  a.  Contribu- 
tion of  One  Hundred  Dollars- 


SOLOMON  &    RUBEN   ADD    ONE    HUNDRED    DOLLARS    MORE. 


in  the  subject,  let  me  say  now  that  I  have  not  power  to  instruct 
anybody  connected  with  the  Carnegie  Steel  Co.  Ltd.  The 
officers  are  elected  for  a  year  and  no  one  can  interfere  with 
them.  .  .  .  I  do  not  believe  in  ruling  through  the  voting  power, 
even  if  I  could.  .  .  .  When  I  could  not  bring  my  associates  in 
business  to  my  views  by  reason  I  have  never  wished  to  do  so 
by  force.  As  for  instructing  or  compelling  them  under  the  law 
to  do  one  thing  or  another  that  is  simply  absurd.  I  could  not 
if  I  would,  and  I  would  not  if  I  could.  .  .  . 

And  now  one  word   about   Mr.    Frick.  I  am  not  mis- 


CARNEGIE'S  EULOGY  OF  PRICK 


253 


taken  in  the  man,  as  the  future  will  show.  Of  his  ability,  fair- 
ness and  pluck  no  one  has  now  the  slightest  question.  His  four 
years'  management  stamps  him  as  one  of  the  foremost  managers 
of  the  world — I  would  not  exchange  him  for  any  manager  I  know. 

People  generally  are  still  to  learn  of  those  virtues  which 
his  partners  and  friends  know  well.  If  his  health  be  spared 
I  predict  that  no  man  who  ever  lived  in  Pittsburg  and  managed 
business  here  will  be  better  liked  or  more  admired  by  his  em- 
ployees than  my  friend  and  partner  Henry  Clay  Frick,  nor  do  I 
believe  any  man  will  be  more  valuable  for  the  city.  His  are 
the  qualities  that  wear ;  he  never  disappoints ;  what  he  prom- 
ises he  more  than  fulfils.  .  .  . 

I  hope  after  this  statement  that  the  public  will  understand 
that  the  officials  of  the  Carnegie  Steel  Company,  Limited,  with 
Mr.  Frick  at  their  head,  are  not  dependent  upon  me,  or  upon 
any  one  in  any  way  for  their  positions,  and  that  I  have  neither 
power  nor  disposition  to  interfere  with  them,  in  the  manage- 
ment of  the  business.  And  further,  that  I  have  the  most  im- 
plicit faith  in  them." 


>uur    PROTECTED   »*  M^KINLEY   TARIFF  Ano  AftMY  o>  PIN  KEftTONS.  \&S\ 


*t!L*jy   *  SHOTS  AT  TO S  OPTION  69  H.C.KKICX 


A  campaign  pleasantry. 


CHAPTER    XVII 


Ore-docks"  and  vessels. 


A   RELUCTANT    SUPREMACY 

IT  is  something  more  than 
a  coincidence  that  the  day 
that  marked  the  beginning 
of  the  Homestead  strike 
saw  the  birth  of  the 
Carnegie  Steel  Company, 
Limited.  On  July  1st, 
1892,  for  the  first  time  in 
their  history,  the  separate 
establishments  whose 

growth  we  are  tracing  were  brought  into  a  single  organization, 
and  endowed  with  one  mind,  one  purpose,  one  interest.  Mr. 
Frick  was  too  wise  a  general  to  enter  a  battle  with  his 
forces  needlessly  scattered ;  and  while  fences  were  being  built 
around  the  company's  works,  their  corporate  strength  was  also 
concentrated  and  made  instantly  responsive  to  his  will. 

The  consolidation  of  the  different  Carnegie  interests  had, 
however,  long  been  contemplated  by  Mr.  Frick.  As  early  as 
February,  1890,  he  had  discussed  the  project  with  Mr.  Abbot, 
chairman  of  Carnegie,  Phipps  &  Co.,  and  had  made  it  the  sub- 
ject of  a  written  communication  to  Mr.  Carnegie.  But  at  that 
time  there  were  obstacles  of  a  financial  nature.  One  concern 
was  used  to  make  paper  for  the  other,  as  the  phrase  is.  That 
is,  one  Carnegie  company  selling  to  another  was  able  to  discount 
the  notes  it  received  in  payment ;  so  that  the  transaction  had 
all  the  banking  advantages  of  an  outside  trade.  On  occasions, 
too,  such  notes  could  be  discounted  without  any  antecedent 

254 


A    GREAT   CONSOLIDATION  255 

sale.  In  transactions  of  this  kind  Mr.  Stewart,  with  his  strong 
financial  connections,  had  long  proved  very  useful. 

Mr.  Stewart  had  died  in  1889.  His  interest  had  been 
acquired  by  Mr.  Frick,  who,  adding  it  to  his  previous  holdings, 
thus  became  as  large  a  stockholder  as  Mr.  Phipps,  and  second 
only  to  Mr.  Carnegie.  At  the  same  time  Mr.  Frick  became 
chairman  of  Carnegie  Brothers  &  Co.,  Limited,  as  well  as  a 
director  in  Carnegie,  Phipps  &  Co.  Having  previously  resumed 
the  presidency  of  the  coke  company,  which  he  had  resigned 
under  circumstances  already  related,  Mr.  Frick  freely  used  its 
credit  to  finance  the  two  steel  companies  and  their  subsidiary 
interests,  and  thus  made  it  unnecessary  to  maintain  their  organi- 
zations separate.  The  consolidation  of  thece  interests  would 
have  come  in  the  course  of  time  as  a  measure  of  economy;  but 
the  combination  was  hastened  by  the  threat  of  war  with  labor. 

The  sociologist  will  be  interested  in  this  illustration  of  the 
unifying  effect  of  war  in  industrialism.  Predatory  competi- 
tion, which  is  a  form  of  warfare,  has  a  similar  consolidating 
effect;  and  the  modern  trust  is  its  most  conspicuous  expression. 
The  processes  of  industrial  evolution  often  take  a  form  that  in- 
evitably suggests  the  thought  that  even  such  great  leaders  as 
Mr.  Frick,  with  their  apparent  independence  and  strong  govern- 
ing power,  are  little  more  than  passive  instruments  through 
which  natural  forces  operate.  The  changes  which  an  industrial 
organism  undergoes  in  its  development  are  unquestionably 
governed  by  the  same  laws  as  those  which  mould  the  less  com- 
plex forms  of  life,  to  which  the  doctrine  of  evolution  is  popu- 
larly limited;  and  it  often  appears  that  the  strong  personality 
of  the  greatest  captain  of  industry  can  do  little  more  than  con- 
trol the  direction  of  this  growth.  His  power  is  comparable  to 
that  of  the  gardener  who  fastens  the  young  shoots  of  his  peach 
tree  to  the  southern  wall,  and  causes  it  to  spread  out  in  the 
sunshine  more  than  it  would  if  left  alone. 

In  the  consolidation  of  July  ist,  1892,  the  Carnegie  Steel 
Company,  Limited,  became  the  owner  of  the  Upper  and  Lower 


256  A    RELUCTANT   SUPREMACY 

Union  Mills,  the  Lucy  Furnaces,  the  Edgar  Thomson  Steel 
Works,  the  mills  at  Homestead,  the  newly  acquired  property  at 
Duquesne,  the  Keystone  Bridge  Works,  the  unprofitable  and 
prolonged  experiment  at  Beaver  Falls,  with  a  few  other  interests 
in  ore  and  natural  gas  sprinkled  about  Western  Pennsylvania. 
1  .The  capital  was  $25,000,000.  It  was  a  gigantic  concern;  but, 
as  De  Tocqueville  says  of  the  United  States  of  his  time,  it  was 
"a  giant  without  bones."  It  had  gristle,  however,  and  this 
soon  hardened  into  bones. 

Having  brought  the  separate  establishments  into  a  single 
organization,  Mr.  Frick  now  sought  to  harmonize  their  relations 
so  that  each  plant  would  serve  to  supplement  and  round  out  the 
operations  of  every  other.  This  he  effected  by  the  Union  Rail- 
•  way,  which  he  built  to  connect  the  principal  works  with  each 
other  and  with  all  the  different  transportation  systems  entering 
the  Pittsburg  district.  It  was  a  masterly  conception;  for  it 
unified  the  scattered  works  and  made  them  as  easy  to  operate  as 
if  they  had  been  contiguous.  At  the  same  time  it  gave  them 
unequalled  transportation  facilities  through  direct  connection 
with  every  important  railway  system  in  Western  Pennsylvania. 

The  advantages  of  easy  exchange  of  products  among  the 
different  works  cannot  be  stated  in  figures ;  but  they  have  their 
place  in  the  phenomenal  record  of  the  firm's  profits  given  else- 
where. The  saving  in  switching  charges  alone  paid  interest 
on  the  cost  of  the  railroad  ;  and  the  company  was  allowed  twenty- 
five  cents  a  ton  rebate  on  ore  rates. 

A  further  advantage  was  that  the  company  thus  regained 
possession  of  its  own  yards.  Hitherto  the  different  railroads 
running  into  the  works  had  control  of  all  tracks  and  sidings ; 
and  so  tenaciously  did  they  hold  to  these  cheaply  acquired 
rights  that  they  often  resisted  the  extension  of  a  mill  that  in- 
volved the  removal  of  a  track.  This  cause  of  annoyance  now 
came  to  an  end;  and  a  judicious  rearrangement  of  tracks  and 
sidings,  so  as  to  meet  changed  conditions,  resulted  in  a  great 
saving  of  yard  space  and  expedited  the  handling  of  vast  ton- 


THE    EDGAR    THOMSON    SI 


THE  HOMESTEAD   STE1 


THE  DUQUESNE   STEE 


Plate 


L    WORKS,   BRADDOCK,   PA. 


\     V  "XL, 


WORKS,   MUNHALL,   PA. 


VORKS,   DUQUESNE,   PA. 


THE    UNION  RAILROAD  257 

nages.  The  superiority  of  this  system,  by  which  the  traffic  was 
regulated  by  one  organization  instead  of  by  several  railroads,  is 
readily  seen  when  a  statement  is  made  of  the  total  tonnage 
entering  and  leaving  the  works  of  the  Carnegie  Steel  Company. 
In  1899  this  amounted  to  16,000,000  tons — as  much  as  the 
combined  total  freight  handled  by  the  Northern  Pacific,  Union 
Pacific,  and  Missouri  Pacific  railways,  with  their  13,000  miles 
of  track,  1,500  locomotives,  and  50,000  freight-cars. 

The  next  step  in  the  progress  of  this  great  industrial  aggre- 
gate towards  completeness  was  that  which  gave  it  possession  of 
the  iron  ore  it  needed.  This  was  the  only  thing  it  had  to  buy 
of  outsiders.  So  long  as  it  did  not  itself  produce  everything  it 
needed,  it  could  not  be  considered  a  perfect  industrial  unit,  such 
as  it  was  Mr.  Prick's  ambition  to  make  it.  An  accident  helped 
him  to  a  realization  of  his  great  plans ;  though  they  were  nearly 
frustrated  through  the  unexpected  opposition  of  Mr.  Carnegie. 

The  story  of  the  way  the  Carnegie  Steel  Company  acquired    ' 
its  great  ore  mines  on  Lake  Superior  lacks  none  of  the  romance  • 
that  makes  the  history  of  Homestead  and  Duquesne  so  inter- 
esting.     It  is  the  story  of  a  huge  profit  made  with  hardly  a  <• 
dollar  of  investment,  and  the  accepting  of  an  impregnable  posi- 
tion in  the  industrial  world  with  a  reluctant  and   complaining 
consent.     It  is  the  amplified  tale  of  the  "  most  hazardous  enter- 
prise," told  afresh ;  but  where  a  thousand  dollars  was  then  in- 
volved, a  hundred  millions  now  hold  our  interest.     Unfortu- 
nately it  is  a  story  that  shatters  all  preconceptions  of  the  genius 
necessary  to  achieve  millionaireship ;  but  that  is  merely  inci- 
dental. 

Among  the  boy  companions  of  Thomas  M.  Carnegie  was 
Henry  W.  Oliver.  He  had  become  one  of  the  cleverest  busi- 
ness men  of  Pittsburg,  and  had  made  several  fortunes  in  iron 
and  steel  manufacture  before  he  reached  the  maturity  of  mid- 
life.  He  was  singularly  far-sighted  and  enterprising,  and  a 
skilful  financier.  Some  time  in  1892  he  formed  a  company, 
called  after  himself,  to  operate  the  Missabi  Mountain  mine  on 
17 


258 


A    RELUCTANT  SUPREMACY 


the  Mesaba  range;  his  main  object  being  to  provide  a  cheap 
and  uninterrupted  supply  of  high-grade  Bessemer  ore  for  his 
own  furnaces. 

Mr.  Frick,  who  had  similar  ideas  for  his  own  works,  watched 
the  experiment  with  interest ;  and  presently  he  suggested  to 
Mr.  Oliver  that  an  ore  combination  with  the  Carnegie  Steel 
Company  might  be  made  mutually  beneficial.  Mr.  Oliver  was 
quick  to  see  the  advantage  of  such  a  union;  permitting  him,  as 


Group  of  miners  near  Lake  Superior. 

it  would  do,  to  bargain  with  independent  miners  and  transporta- 
tion companies  on  a  basis  of  a  high  minimum.  In  other  words, 
the  enormous  consumption  of  ore  of  the  united  plants  would 
enable  him  to  offer  a  guaranteed  tonnage  to  railways  and  steam- 
boat companies  in  exchange  for  low  rates,  as  well  as  to  make 
exceptional  offers  to  mine  owners  willing  to  let  their  ores  be 
worked  on  a  royalty  basis.  He  therefore  viewed  the  sug- 
gestion with  favor,  and,  after  some  negotiations,  agreed  to  Mr. 
Frick' s  proposal  to  give  the  Carnegie  Company  one-half  the 


•A    DISCREDITED   PROPHET  259 

stock  of  the  Oliver  Mining  Company,  conditioned  on  a  loan  of 
half  a  million  dollars,  secured  by  a  mortgage  on  the  ore 
properties,  to  be  spent  in  development  work.  In  this  ingenious 
way  Mr.  Frick  so  arranged  that  the  Carnegie  ore  interest  would 
not  cost  a  dollar. 

The  matter  was  at  once  brought  to  the  attention  of  Mr. 
Carnegie,  who  laconically  opposed  it  as  follows,  in  a  letter  dated 
Rannoch  Lodge,  Kinloch-Rannoch,  Perthshire,  August  2Qth, 
1892: 

"  Oliver's  ore  bargain  is  just  like  him — nothing  in  it.  If 
there  is  any  department  of  business  which  offers  no  inducement, 
it  is  ore.  It  never  has  been  very  profitable,  and  the  Massaba  is 
not  the  last  great  deposit  that  Lake  Superior  is  to  reveal. " 

Mr.  Frick,  however,  made  the  combination  with  Mr.  Oliver ; 
and,  on  his  return  from  Europe,  Mr.  Carnegie  expressed  him- 
self so  vigorously  in  condemnation  of  it  that  there  ensued  the 
first  coldness  between  himself  and  Mr.  Frick. 

Mr.  Carnegie's  attitude  was  not  modified  by  the  successful 
working  of  the  arrangement ;  and  during  the  next  two  years  he 
repeatedly  placed  himself  on  record,  with  increasing  emphasis, 
as  being  opposed  to  any  venture  in  Lake  Superior  ores.  Writ- 
ing to  the  Board  of  Managers  from  Buckhurst  Park,  Withyham, 
Sussex,  on  April  i8th,  1894,  he  says  again: 

"The  Oliver  bargain  I  do  not  regard  as  very  valuable. 
You  will  find  that  this  ore  venture,  like  all  our  other  ventures 
in  ore,  will  result  in  more  trouble  and  less  profit  than  almost 
any  branch  of  our  business.  If  any  of  our  brilliant  and  talented 
young  partners  have  more  time,  or  attention,  than  is  required 
for  their  present  duties,  they  will  find  sources  of  much  greater 
profit  right  at  home.  I  hope  you  will  make  a  note  of  this 
prophecy. " 

Of  course  the  managers  made  a  note  of  the  prophecy;  and 
it  afterwards  furnished  subject  for  many  a  subdued  laugh  at 
their  meetings. 


26o  A    RELUCTANT  SUPREMACY 

It  subsequently  transpired,  however,  that  Mr.  Carnegie 
thought  his  company  was  entitled  to  a  larger  share  than  one- 
half  of  the  Oliver  Mining  Company's  stock;  and,  to  please  him, 
Mr.  Oliver  consented  to  sell  the  Carnegies  an  additional  interest 
of  one-third,  making  their  holdings  five-sixths  of  the  total 
stock.  But  he  took  care  to  safeguard  his  own  interests  by  a 
contract  under  which  the  Oliver  furnaces  were  entitled  to  one- 


An  open-pit  mine. 

sixth  of  all  ore  mined  by  the  company.     At  this  time  the  capi- 
tal of  the  Oliver  Mining  Company  was  $1,200,000. 

In  1896  Messrs.  Oliver  and  Frick  made  the  celebrated 
Rockefeller  connection,  by  which  they  leased  the  other  great 
mines  on  the  Mesaba  range  on  a  royalty  basis  of  only  25 
cents  a  ton.  This  low  price  was  given  by  the  Rockefellers  in 
consideration  of  a  guaranteed  output  of  600,000  tons  a  year,  to 
be  shipped  over  the  Rockefeller  railroads  and  steamships  on  the 
Lakes,  with  an  equal  amount  from  the  Oliver  mine.  This 


A    SAVING   OF  $27,000,000  261 

amounted  to  1,200,000  tons  a  year;  and  as  the  contract  was  to 
run  for  fifty  years,  it  meant  a  guarantee  of  60,000,000  tons  of 
freight,  at  80  cents  a  ton  by  rail  and  65  cents  a  ton  on  the  lakes  * 
— a  consideration  great  enough  to  justify  the  low  royalty  of  25 
cents  when  other  mine  owners  were  getting  65  cents.  To  the 
Carnegie- Oliver  iron  interests  it  meant  a  visible  saving  of 
$27,000,000. 

This  alliance  with  the  Rockefellers  had  an  unexpected  re- 
sult.    It  produced  a  panic  among  the  other  mine  owners ;  and    • 
stockholders  in  Boston,  Chicago,  Cleveland,  and  the  Northwest 
hastened  to  get  rid  of  their  ore  properties  at  almost  any  price. 
The  demoralization   extended  to  the  ore  markets;  and  Norrie,   , 
which  sold  at  $6  a  ton  in  1891,  dropped  to  $2.65  on  the  docks 
at  Cleveland. 

This  was  Mr.  Oliver's  opportunity;  and  backed  by  Mr.  - 
Frick  and  some  of  the  more  enterprising  Carnegie  managers, 
like  Curry,  Schwab,  Gayley  and  Clemson,  he  hastened  to  secure 
options  on  all  the  best  mines  in  the  Lake  Superior  region.  The 
following  is  the  argument  he  submitted  to  the  Carnegie  mana- 
gers on  July  2 /th,  1897  : 

NEW  YORK,  N.  Y.,  July  27,  1897. 

H.  C.  FRICK,  Chairman, 

DEAR  SIR  :  I  mail  you  my  specific  reports  on  the  Norrie, 
Tilden,  and  Pioneer  mines. 

I  now  address  you  mainly  to  impress  my  views  that  it  should 
be  our  policy  to  acquire  all  three  of  these  properties.  We  (I 
mean  the  -Carnegie  and  Oliver  furnaces)  have  paid  more  than 
our  share  of  tribute  to  Cleveland  and  Northwestern  miners. 
Part  of  their  receipts  were  profit,  but  a  large  part  was  wasted 
in  expenses  that  we  will  in  the  future  save :  in  exploration,  In 
which  we  will  benefit;  in  development  of  mines  that  have 
proved  failures ;  and  in  excessive  freight  rates  to  steamship  lines 
controlled  by  the  Cleveland  middle-men.  All  this  should  stop. 
I  claim  that  we  could  produce  and  deliver  our  ore  to  Lake  Erie 
ports  20  to  30  cents  per  ton  cheaper  than  it  can  be  done  by 
those  now  in  control  of  the  mines  we  seek.  Our  saving  would 


262  A    RELUCTANT   SUPREMACY 

be  in  steady  and  more  regular  mining,  in  avoiding  a  line  of  high 
salaried  officers,  in  procuring  lower  Lake  freights,  and  in  sav- 
ing the  Cleveland  commission  of  10  cents  per  ton.  I  am  satis- 
fied that  the  economies  that  we  will  practise  in  the  lines  above 
indicated  will  be  fully  equivalent,  in  the  future,  to  any  royalties 
we  may  pay.  The  Carnegie  furnaces  and  the  Oliver  furnaces 
will  require  about  four  million  tons  of  ore  per  annum.  Our 
minimum,  under  my  proposition,  would  stand  as  follows : 

Mesaba 1,200,000 

Norrie 700,000 

Tilden 400,000 

Pioneer ,  500,000 


TOTAL , 2,800,000  Tons 

On  the  above,  the  only  cash  obligation  that  we  will  have  if 
my  plan  is  carried  out,  is  in  the  purchase  of  the  Norrie  stock. 
The  Mesaba  leases  we  can  throw  up  on  six  months  notice,  and 
the  Tilden  and  Pioneer  leases  on  three  months  notice.  The 
amount  that  we  would  invest  in  the  Norrie  is  a  very  small  item, 
considering  the  immense  stake  we  have  in  the  business  and  the 
fact  that  if  we  do  not  fortify  ourselves  on  the  plan  that  I  have 
indicated,  it  would  be  easy  for  the  mine  owners  to  exact  three 
to  four  millions  of  dollars,  or  even  a  greater  sum,  from  us,  as  a 
profit  on  the  ore  we  consume.  A  glance  at  the  prices  paid  for 
ore  the  past  10  or  15  years  will  show  that  my  estimate  of  the 
profits  that  we  have  paid  them  is  extremely  conservative 

Excuse  me  for  bringing  to  the  attention  of  yourself  and 
your  associates  the  fact  that  the  Carnegie  Company  never  here- 
tofore hesitated  to  invest  millions  of  dollars  to  save  25c  to  5<Dc. 
per  ton  in  the  manufacture  of  pig  iron.  You  destroy  old  plants 
and  erect  new  ones  to  save  a  quarter  of  a  dollar  per  ton.  You 
are  now  engaged  in  building  a  railroad  to  the  Lakes,  at  an  im- 
mense expenditure  of  treasure  and  credit,  with  the  ultimate  ob- 
ject of  making  a  saving  (in  which  your  competitors  to  a  cer- 
tain extent  will  share)  of  25  to  30  cents  per  ton,  and  to  protect 
Pittsburgh  against  high  ore  rates  in  the  future.  I  propose  at  a 
risk  of  using  our  credit  to  the  extent  of  $500,000,  or  possibly 
one  million  dollars,  to  effect  a  saving,  in  which  our  competitors 
will  not  share,  of  four  to  six  million  dollars  per  annum.  All 
arguments  to  the  contrary  notwithstanding,  I  know  I  am  right 
in  these  matters;  as,  in  my  judgment,  with  a  knowledge  of  the 
nature  of  the  ownership  of  the  mines  in  the  Northwest,  no 
power  can  prevent  their  soon  coming  together  and  exacting  the 
old  time  prices  for  ore. 


HENRY    W.    OLIVER'S  FORESIGHT 


263 


On  the  Gogebic  Range,  the  mines  I  have  selected  comprise 
over  80^  of  developed  ore  or  "  ore  in  sight."  They  comprise 
in  this  year's  pool  about  60^  of  the  allotment,  the  allotment 
being  made  not  on  the  basis  of  ore  in  sight,  but  on  the  basis  of 
the  preceeding  year's  shipments.  They  are  the  only  mines  on 
the  Range  that  can  mine  iron  ore  at  present  prices  and  make 
money.  The  other  mines  with  their  small  product  and  heavy 
general  expenses,  are  not  making  one  cent  per  ton.  The  result 


An  ore-train. 


is  that  one  or  two  of  the  smaller  of  these  mines  are  being 
thrown  up  this  year;  and,  with  proper  care  and  attention,  if  we 
were  on  the  ground,  we  should  be  able  to  take  up  practically 
all  of  them. 

Doubts  may  arise  as  to  the  quantity  of  ore  in  the  properties 
we  propose  to  take  up.  The  question  is,  however,  if  the  ore  is 
not  in  the  mines  I  propose  to  acquire,  where  can  it  be  shown  to 
exist,  in  properties  available  for  lease  or  purchase,  in  the  Ranges 
other  than  the  Mesaba  Range  ?  I  have  selected  as  the  proper- 
ties we  should  acquire  the  mines  that  common  report  names  as 
having  the  largest  quantity  and  our  special  reports  confirm  that 
view.  If  there  be  not  large  quantities  of  ore  in  the  properties 
we  have  under  consideration,  then  there  are  no  large  deposits 


264 


A    RELUCTANT  SUPREMACY 


of  Bessemer  ore  yet  known,  outside  of  the  Mesaba  Range,  and 
the  Chapin  and  Minnesota  Iron  Go's  properties.  In  that  case, 
Bessemer  ores  will  shortly  appreciate  in  value  and  we,  with 
others,  will  have  to  pay  the  holders  thereof  a  large  advance  on 
present  prices. 

An  important  point,  in  making  the  venture  in  the  Gogebic 
region  and  securing  a  large  body  of  ore,  is  the  effect  it  will  have 
upon  the  guarantee  made  us,  by  the  Rockefeller  party,  that  our 
ore  shall  be  as  low  as  any  other  Mesaba  ore  at  Lake  Superior 
ports.  The  possession  of  a  large  body  of  ore  in  the  Gogebic 
Range  will  strengthen  our  position,  in  holding  the  Rockefeller 
people  down  to  low  freight  rates  from  the  Mesaba  Range. 

The  three  properties  I  propose  to  take  up  contain  not  only 
the  largest  body  of  ore  in  sight,  but  are  practically  the  only 
mines  excepting  a  few  extra  low  phosphorus  mines  and  the 
Chapin  and  Minnesota  Iron  Co.,  properties,  that  are  this  year, 
under  their  system  of  mining  and  expenses,  producing  ores  at  a 
profit.  In  addition  to  this,  as  showing  their  standing  in  the 

trade,  they  have 
been  allotted,  on  the 
basis  of  last  year's 
shipments,  over  50^ 
of  the  Gogebic  out- 
put, and  over  25^ 
of  the  total,  in  a 
Pool  of  4,250,000 
tons,  comprising  all 
the  Bessemer  ores 
(including  Chapin) 
produced  in  the 
Northwest,  except- 
ing only  ores  from 
the  Mesaba  Range. 
I  am  not  ignor- 
ing the  strong  posi- 
tion we  hold  on  the  Mesaba  Range.  With  two  exceptions, 
we  possess  the  only  steam  shovel  mines  and  the  low  cost  of 
this  ore  is  extremely  gratifying.  More  Mesaba  ore  can  be 
used  in  our  mixtures,  but  it  is  not  a  wise  policy  to  quickly  ex- 
haust the  rich  quarry  we  have  on  the  Mesaba  Range,  taking 
off  rapidly  the  surface  ore.  Although  we  are  mining  it  at 
present  for  less  than  five  cents  per  ton  for  labor,  we  must 
look  to  the  future,  when  we  will  have  to  go  deeper,  pump 
water  and  lif.t  the  ore.  We  should  rather  prolong  the  period 


A   BUCYRUS  SHOVEL  AT  WORK. 

"  Five  cents  a  ton  for  labor." 


Plate  XI 


HENRY  W.  OLIVER 


A    STRONG   ARGUMENT  265 

of  cheap  steam  shovel  mining,  take  in  the  other  Range  prop- 
erties I  suggest  for  mixture;  and,  by  working  one  Range 
against  the  other,  keep  down  costs  of  freights.  I  desire  to 
impress  upon  you  the  fact,  that  if  it  had  not  been  for  our 
Rockefeller-Mesaba  deal  of  last  year,  with  the  consequent  de- 
moralization in  the  trade  caused  by  the  publication  thereof,  it 
would  not  have  been  possible  for  us  to  now  secure  the  other 
Range  properties  I  propose  to  acquire,  either  by  lease  or  for  any 
reasonable  price.  We  simply  knocked  the  price  of  ore  from 
$4.00  down  to  say  $2.50  per  ton.  Now  let  us  take  advantage 
of  our  action  before  a  season  of  good  times  gives  the  ore 
producers  strength  and  opportunity  to  get  together  by  com- 
bination. 

I  trust  that  when  you  read  this  letter  and  my  reports  you 
will  not  attribute  the  strong  position  I  take  to  my  usually 
optimistic  nature.  It  is  true  that  I  generally  like  to  view  the 
bright  side  of  affairs,  but  these  practical  matters  I  have  digested 
in  a  thoroughly  judicial  spirit,  and  my  conclusions  are  the  result 
of  great  thought  and  most  thorough  investigation.  You  do  not 
hear  of  the  many  properties  I  have  condemned  and  turned  down 
as  being  not  worthy  of  your  consideration.  I  have  selected, 
for  the  decision  of  my  associates,  only  the  very  best.  The 
Minnesota  Iron  Company  properties  are  out  of  the  question; 
the  banns  have  been  published  and  union  with  the  Illinois  Steel 
Company  is  only  a  matter  of  time.  All  others,  however,  I 
have,  in  one  shape  or  another  had  before  me.  The  Chapin  is 
too  high  in  phosphorus  and  held  by  too  stiff  a  crowd.  Other 
Menominee  properties — (the  Aragon,  for  instance,  that  was 
sold  the  other  day), — too  small  and  expensive.  I  have  not 
recommended  or  tried  to  lead  you  into  waste  of  money  on  ex- 
plorations of  virgin  property.  Mr.  A.  M.  Byers  told  me  that 
he,  with  Kimberly,  had  worked  for  years,  spending  over  a  mill- 
ion of  dollars,  in  sinking  shafts  through  solid  rock,  hunting  a 
lost  vein  of  ore,  on  the  Ludington  mine,  which  adjoins  the 
Chapin.  Please  recall  that  on  the  Mesaba  Range  I  condemned 
poor  properties  such  as  the  Sauntry  and  others ;  that  I  stood 
strongly  against  the  Mahoning  out  of  which  they  have  great 
difficulty  this  year  in  mining  any  but  non-Bessemer  ores,  and 
that  I  only  brought  before  you,  for  approval,  the  magnificent 
properties  on  the  Mesaba  Range  that  we  are  now  operating. 
Pardon  me  for  mentioning  the  above.  I  only  do  it  to  impress 
upon  you  the  fact  that  I  have  analyzed  this  question  most  thor- 
oughly. I  have  given  months  of  thought  to  these  questions, 
where  others  have  scarcely  given  minutes.  I  know  I  am  right 


266  A    RELUCTANT  SUPREMACY 

and  trust  you  and  your  associates  will  give  me  opportunity  to 
prove  it.  The  future  will  show  that  all  my  predictions  will 
come  true  to  the  letter.  Yours  &c 

HENRY    W.    OLIVER. 

This  document  was  sent  by  special  messenger  to  Mr.  Frick 
in  London  and  by  him  transmitted  to  Mr.  Carnegie  in  Scot- 
land. To  the  surprise  and  dismay  of  everybody  concerned,  Mr. 
Carnegie  again  opposed  the  project.  From  the  fastnesses  of 
his  Highland  retreat  he  again  issued  a  laconic  veto,  with  a  quip 
and  a  chuckle  at  his  partners'  enthusiasm.  Thereupon  MK 
Oliver  despatched  the  following  cablegram  : 

G87CM697 

THE    CARNEGIE    STEEL   COMPANY,    LIMITED. 


PRIVATE    TELEGRAPH    SERVICE. 


Telegram   Sent  from  General   Offices;    Carnegie   Building,   Pittsburg,  Pa. 

Sent  by  Received  by  Time, 


Dated.       September  25,   1897. 
To  CARNEGIE         LAGGAN 

I  am  distressed  at  indications  here  that  Norrie  options  ex- 
piring on  Monday,  are  to  be  refused.  It  would  be  a  terrible 
mistake.  The  good  times  make  it  that  I  could  not  possibly 
secure  these  options  again  at  fifty  per  cent.,  advance.  The 
Norrie  mine  controls  the  whole  situation.  They  have  sold  over 
one  million  tons  this  year.  With  the  additional  property  we 
will  get  from  the  fee  owners,  we  secure  fifteen  to  twenty  million 
tons  of  the  ore  that  the  Carnegie  Company  are  purchasing  this 
year  five  hundred  and  fifty  thousand  tons.  I  will  guarantee, 
counting  the  surplus  they  have  in  their  treasury,  to  return  in 
profits  every  dollar  we  invest  in  two  years.  Do  not  allow  my 
hard  summer's  work  to  go  for  naught. 

HENRY    W.    OLIVER 
chg.  O.  M.  Co. 

It  will  be  seen  from  this  that  the  Carnegies  had  just  bought 
550,000  tons  of  this  very  ore,  which  was  yielding  the  mine 
owners  $i  to  $1.25  a  ton  profit.  By  instructions  from  Scotland 


REFUSAL    OF  $500,000,000! 


267 


they  had  made  this  purchase  just  at  the  critical  moment  that 
Mr.  Oliver  was  negotiating  for  options  on  the  shares  of  the 
Norrie  mine;  and  his  task  was  made  doubly  difficult  by  the 
fact.  Before  this  the  Norrie  owners  had  sold  only  150,000 
tons,  as  against  ten  times  that  amount  in  previous  years.  Not- 
withstanding this  embarrassing  purchase,  Mr.  Oliver  was  able 
to  secure  options  from  about  four  hundred  stockholders,  who 
resided  in  every  part  of  the  country,  and,  one  might  say,  in 


Piles  of  iron  ore  ready  for  loading. 

every  part  of  the  world.     This  was  the  "  hard  summer's  work  " 
which  was  rendered  futile  by  a  word  from  Carnegie. 

On  receipt  of  Mr.  Oliver's  cablegram,  however,  Mr.  Carne- 
gie so  far  reconsidered  his  objections  as  to  leave  the  decision 
to  the  chairman  and  Board  of  Managers  in  Pittsburg ;  and  these 
gentlemen  promptly  authorized  Mr.  Oliver  to  close  the  deal. 
This  action  was  the  pivotal  point  in  the  gathering  together, 
by  the  Carnegie-Oliver  interests,  of  the  great  ore  properties 


268  A    RELUCTANT  SUPREMACY 

which  gave  them  their  impregnable  position  in  the  iron  indus- 
try of  the  country.  On  the  organization  of  the  United  States 
Steel  Company,  the  Carnegie- Oliver  company  owned  two-thirds 
of  the  known  Northwestern  supply  of  Bessemer  ores — roughly, 
500,000,000  tons,  which  Mr.  Schwab  has  since  valued  at  $500,- 
000,000.  It  would  be  difficult  to  find  a  parallel  to  this  inci- 
dent in  any  romance  of  American  industrialism. 

It  is  only  fair  to  Mr.  Carnegie  to  add  that  he  afterwards  so 
far  modified  his  estimate  of  Mr.  Oliver  as  to  offer  him  an  inter- 
est in  the  Carnegie  Steel  Company. 

The  great  value  of  the  gift  which  Andrew  Carnegie  thus 
reluctantly  allowed  Mr.  Frick  to  accept  for  the  company  may 
be  further  illustrated.  The  first  Mesaba  mine  secured  by  Mr. 
Oliver  is  of  such  character  that  5,800  tons  of  ore  have  been 
mined  and  loaded  into  cars  by  one  steam  shovel  in  ten  hours; 
and  the  output  for  one  month  was  164,000  tons.  This  was  the 
work  of  only  eight  men.  Three  such  machines,  made  by  the 
Bucyrus  Company  of  South  Milwaukee,  mined  from  its  natural 
bed  915,000  tons  of  ore  during  the  season  of  1900,  working  day 
shift  only.  Some  of  the  other  great  mines  are  of  the  same 
character.  The  method  of  mining  is  shown  in  the  accompany- 
ing photographs.  Five  tons  of  ore  are  lifted  by  the  machine 
each  stroke;  and  five  full- weight  lifts  will  fill  a  car.  A  25-ton 
car  can  be  filled  in  two  and  a  half  minutes,  which  is  at  the  rate 
of  600  tons  an  hour.  Andrew  Carnegie  often  says  that  Fortune 
timidly  knocks  at  every  man's  door  at  least  once  during  his 
lifetime.  The  statement  is  too  modest  to  fit  his  own  case;  for 
Fortune  has  repeatedly  battered  clown  the  barricades  with  which 
he  has  tried  to  exclude  her.  Nor  has  she  been  scared  away  by 
the  inscription  above  the  Carnegie  threshold,  "  Pioneering  don't 
pay!" 

Having  thus  provided  an  unfailing  supply  of  the  best  Besse- 
mer ores  at  the  mere  cost  of  mining  them,  Mr.  Frick  at  once 
began  to  elaborate  plans  for  their  cheap  and  certain  transporta- 
tion to  the  furnaces.  A  contract  with  the  Bessemer  Steamship 


THE  LAKE  RAILROAD  269 

Company,  a  Rockefeller  concern,  ensured  the  regular  delivery 
of  1,200,000  tons  a  year  at  Lake  Erie  ports;  and  an  agree- 
ment was  simultaneously  made  with  the  Pennsylvania  Railroad 
for  the  land  haul  of  some  two  hundred  miles.  But  this  condi- 
tion of  dependence  was  unsatisfactory ;  and  Mr.  Frick  boldly 
talked  of  building  his  own  railroad  to  the  Lakes.  This  brought 
an  offer  from  the  president  of  the  Pennsylvania  Railroad  of  bet- 
ter facilities;  and  Mr.  Frick  proposed  an  arrangement  under 
which  the  Carnegie  Steel  Company  should  run  its  own  ore 
trains  from  Lake  Erie,  equipped  with  its 
own  locomotives  and  crew,  over  the 
Pennsylvania  tracks.  This  plan  was 
well  received  by  the  officials  of  the 
Pennsylvania  Railroad ;  but  before 
anything  definite  had  been 
decided  upon,  a  telegram  was 
received  from  Mr.  Carnegie 
in  Florida,  asking  that  all 
negotiations  be  suspended 
until  the  arrival  of  his  letter. 
When  this  came  it  was  found 
that  he  had  entered  into  an 

"Battered  down  the  barricades." 

agreement  with  Mr.   Samuel 

B.  Dick,  president  of  the  Pittsburg,  Shenango  and  Lake  Erie 
Railroad,  to  reorganize  that  company,  which  was  on  the  verge 
of  bankruptcy,  and  to  build  an  extension  from  its  terminus  at 
Butler  to  a  point  on  the  Union  Railroad  at  Bessemer. 

This  Pittsburg,  Shenango  and  Lake  Erie  had  had  an  event- 
ful history,  involving  receiverships,  reorganizations,  and  con- 
solidations ;  and  at  this  time  it  had  little  more  than  a  right  of 
way  and  two  streaks  of  rust,  as  the  saying  is.  It  had  certain 
terminal  facilities  at  Conneaut  Harbor,  however;  and  during 
the  previous  year  (1895)  a  quarter  of  a  million  tons  of  ore  had 
been  handled  there.  The  Government  was  dredging  the  harbor, 
and  its  facilities  were  capable  of  some;  improvement,  though  not 


2/0 


A    RELUCTANT  SUPREMACY 


to  the  extent  expected  when  this  deal  was  made.     The  harbor 
has  frequently  been  inconveniently  crowded. 

On  July  25th,  1896,  the  first  contract  was  let  for  the  exten- 
sion to  Pittsburg;  and  simultaneously  the  work  of  renewing 
the  old  track  was  begun.  One-hundred-pound  rails  were  laid 
down,  grades  lowered,  wooden  trestles  replaced  with  steel,  and 
in  other  ways  the  road  was  so  changed  as  practically  to  make  it 


Ore  vessels  in  Conneaut  Harbor. 

a  new  one.  A  maximum  south-bound  grade  of  thirty-one  feet 
per  mile  was  secured  over  the  entire  route,  an  achievement  of 
no  small  difficulty  in  the  hilly  parts  of  Western  Pennsylvania. 
A  steel  bridge  across  the  Allegheny  two-thirds  of  a  mile  long 
was  the  most  noteworthy  engineering  feature  of  this  road; 
and  the  whole  work  of  renewal  and  the  building  of  forty-two 
miles  of  new  track  occupied  only  fifteen  months.  By  October 
4th,  1897,  ore  trains  consisting  of  thirty-five  steel  cars,  each 
carrying  100,000  pounds,  were  running  from  the  company's  own 


SOME   IMPRESSIVE   RECORDS  271 

docks  on  Lake  Erie  over  the  company's  own  line  to  Bessemer, 
and  there  distributed  over  the  company's  Union  Railroad  to  the 
blast-furnaces  at  Braddock,  Duquesne,  and  Pittsburg.  It  was 
a  long  step  in  the  progress  towards  self-sufficiency  at  which  Mr. 
Frick  had  long  been  aiming;  and  it  had  cost  nothing  beyond  an 
issue  of  bonds,  which  the  volume  of  traffic  furnished  by  the  - 
Carnegie  Steel  Company  itself  made  gilt-edged. 

The  results  of  the  operation  of  this  road,  now  known  as  the 
Pittsburg,  Bessemer  and  Lake  Erie,  and  its  docking  facilities 
at  Conneaut,  as  set  forth  by  Mr.  J.  T.  Odell,  its  former  vice- 
president,  are  as  follows : 

"  The  lowest  rate  per  ton  per  mile,  the  highest  average 
length  of  revenue  haul  in  proportion  to  its  track  mileage,  the 
greatest  density  of  tonnage  in  proportion  to  its  freight-train 
mileage,  the  greatest  average  paying  load,  and  the  lowest  ' ton- 
mile  cost  *  of  any  road  on  the  American  continent  reporting  to 
the  Interstate  Commerce  Commission.  The  average  paying  load 
of  all  its  freight  trains,  including  three  branches,  and  with  but 
little  back  loading,  was,  for  the  year  ending  December  31, 
1899,  777  tons.  It  is  confidently  expected,  when  the  south  and 
north  bound  tonnage  is  70  per  cent,  and  30  per  cent,  respect- 
ively, and  the  tonnage  reaches  5,000,000  tons  annually,  as  it 
promises,  that  the  average  paying  load  will  be  not  less  than 
900  tons,  or  four  and  one-half  times  greater  than  the  present 
average  paying  load  of  the  country.  The  maximum  weight  of 
the  paying  load  for  the  year  was  1,580  net  tons,  with  the  aver- 
age, as  before  stated,  of  777  tons.  Of  the  ore  trains,  each 
earned  on  a  3}t-mi\l  rate  per  ton  per  mile  (gross  ton)  $5.13 
per  train  mile.  The  road  is  laid  with  loo-pound  rail  and  the 
track  ballasted  with  furnace  slag.  The  bridges  will  carry  6,600 
pounds  to  the  lineal  foot.  The  standard  locomotive  is  the  con- 
solidation pattern,  having  cylinders  22  by  28  inches  and  weigh- 
ing 170,000  pounds  on  the  drivers  alone.  The  ore  equipment 
consists  mostly  of  steel  cars,  weighing  17  tons  and  carrying 
50  tons  of  ore.  The  company  is  having  built  a  few  of  what 
will  prove  to  be  the  heaviest  locomotives  in  the  world,  having 
cylinders  23  by  32  inches  and  weighing  217,000  pounds  on  the 
drivers.  With  these  locomotives  the  total  weight  of  an  ore 
train,  including  the  locomotive  and  light  weight  of  the  cars, 
will  be  about  2,600  tons. 


2/2 


A    RELUCTANT  SUPREMACY 


Ore-discharging  machines  at  Conneaut. 


"  But  it  is  not  only  in  the  operation  of  the  road  that  great- 
est economy  is  obtained,  but  also  in  the  transfer  of  the  ore 
from  the  lake  steamers  to  the  trains.  The  steel  company  owns 
the  entire  harbor  at  Conneaut.  Nine  ships  can  be  docked  at 
the  same  time.  Twenty-five  thousand  tons  of  all  classes  of 
freight  can  be  handled  every  ten  hours.  The  most  modern  ma- 
chinery is  used  for  handling  ore  and  coal.  A  6,000- ton  ship 
can  be  cleared  in  fourteen  hours,  and  in  the  same  time  from  the 
moment  the  hatches  are  opened  the  ore  can  be  at  the  furnaces 

at  Pittsburg.  A  new  steam 
shovel  was  completed  last 
winter  by  which  a  train  of 
35  to  40  cars  will  be  loaded 
with  ore  in  two  hours.  A 
4O-ton  car  of  coal  can  be 
unloaded  and  partly  trimmed 
in  the  ship  in  thirty-six 
seconds.  Most  of  the 
switching  at  Conneaut  is 
done  by  the  haulage  system 
(a  cable  running  between 
the  rails  at  about  4  miles 
per  hour).  The  operating 
officers  believe  that  with  this  railroad  the  utmost  limit  of  all 
that  is  possible  in  solving  the  problem  of  cheap  transportation 
has  been  reached.  Their  achievement  shows  what  remains  to 
be  done  and  can  be  done  by  the  other  railroads  of  this  country 
in  the  same  direction." 

The  only  gap  that  now  remained  was  that  on  the  Lakes. 
To  fill  it  the  company  should  operate  its  own  line  of  steamers. 
While  the  contract  with  the  Bessemer  Steamship  Company 
provided  for  the  conveyance  of  1,200,000  tons  a  year,  the  steel 
company  was  dependent  upon  the  small  fleet  of  ships  owned  by 
individuals  to  a  greater  extent  than  seemed  desirable ;  and  early 
in  1899  the  Oliver  Iron  Mining  Company  purchased  the  Lake 
Superior  Iron  Company's  fleet  of  six  vessels,  each  capable  of 
carrying  3,000  tons,  as  well  as  its  ore  properties  on  the  Mar- 
quette  range.  Before  taking  over  these  steamers  at  the  end  of 
the  year,  certain  changes  in  organization  were  made  in  con- 
formity with  the  suggestions  of  Mr.  Oliver,  contained  in  the 


LAKE    TRANSPORTATION  273 

following  letter  to  the  Board  of  Managers  of  the  Carnegie  Steel 
Company : 

Under  our  attorney's  advice,  taking  in  view  the  legal  com- 
plications that  might  arise  in  a  mining  company  being  interested 
in  navigation,  we  have  settled  that  our  venture  in  the  purchase 
and  building  of  vessels  on  the  Great  Lakes  should  be  conducted 


Ore  docks. 

under  an    organization  distinct  from  the  Oliver  Iron  Mining 
Company.     We  have  taken  out  a  charter  and  organized  the 

PITTSBURGH  STEAMSHIP  COMPANY. 

The  officers  of  the  Company,  the  Board  of  Directors  and 
the  Stock  interests  are  identical  with  those  of  the  Oliver  Iron 
Mining  Company. 

To  finance  the  Company,  I  propose,  first  a  paid  up  capital 
stock  in  cash  of  One  million  dollars  ($1,000,000.00),  and  the 
issue  of  5^  gold  bonds,  interest  payable  semi-annually,  of  four 
million  dollars  ($4,000,000.00).  The  Union  Trust  Company  of 
Pittsburgh  to  be  the  trustee  of  a  mortgage  covering  all  the 
vessels  of  the  fleet,  and  to  issue  to  the  purchasers  of  the  bonds 
interim  certificates  for  eighty  per  centum  of  the  cost  of  the 
vessels  on  the  delivery  to  them  of  satisfactory  bills  of  sale  or 
chattel  mortgage  for  each  vessel  as  it  is  turned  over  by  the 
seller  or  the  builder  of  the  vessel  to  the  new  Company ;  that  is 
18 


274  A   RELUCTANT  SUPREMACY 

to  say,  as  fast  as  each  vessel  is  delivered  to  the  new  Company, 
the  bondholders  advance  80^  of  its  cost,  and  the  stockholders 
the  remaining  20%  of  its  cost.  On  the  completion  of  the  fleet, 
as  now  projected,  bonds  in  proper  shape,  reciting  what  vessels 
they  cover,  with  proper  requirements  for  insurance,  etc.,  will 
be  exchanged  by  the  Trust  Company  for  the  interim  certificates 
above  recited.  The  cost  of  the  vessels  under  contract  (which 
is  all  we  propose  to  acquire  this  season)  aggregate  about  two 
million,  nine  hundred  thousand  dollars  ($2,900,000.00). 

Kindly  advise  me  if  the  above  plan  is  satisfactory  to  the 
Carnegie  interests. 

Bonds  to  be  payable  as  follows : 

Series  "  A, "  Five  years $1,000,000.00 

Series  "  B,"  Ten  years 1,500,000.00 

Series  "  C,"  Fifteen  years 1,500,000.00 


Total $4,000,000.00 

In  this  way,  on  the  very  day  of  Mr.  Prick's  retirement  from 
the  chairmanship  of  the  Carnegie  Steel  Company,  the  huge 
corporation  became  a  complete  industrial  unit,  owning  every- 
thing it  needed  in  its  business,  controlling  every  movement  of 
its  material,  and  in  all  its  operations,  from  mining  the  crude 
ore  to  the  shipment  of  the  finished  steel,  paying  no  outsider  a 
price. 


Ore  docks  by  night. 


CHAPTER    XVIII 
THE   WORKINGS   OF    THE    CORPORATE    MIND 


In  a  Mesaba  mine. 


IN  a  former  chapter  refer- 
ence was  made  to  what  was 
there  called  the  mental  evo- 
lution of  the  great  indus- 
trial organism  whose  growth 
we  are  following,  and  a  hint 
was  given  of  the  important 
part  played  in  it  by  Mr. 
Frick.  One  of  the  most 
conspicuous  directions  of 

this  mental  growth  was  that  involved  in  the  systematization  of 
the  consultative  work  of  the  Board  of  Managers. 

Although  this  board  was  the  brain  of  a  great  body,  its  func- 
tions were  long  performed  without  regularity  or  method,  and 
the  results  of  its  work  were  but  imperfectly  recorded.  This  is 
one  of  the  most  surprising  features  of  this  great  business ;  for 
while  the  workings  of  every  furnace  and  every  machine  were 
carefully  watched  and  tabulated,  the  operations  of  the  greatest 
machine  of  all,  its  brain,  were  spasmodic,  unmethodical,  and 
for  the  most  part  unnoted.  The  Board  of  Managers  met  by 
chance,  there  being  no  fixed  time  for  its  meetings.  Consulta- 
tions and  deliberations  were  conducted  in  a  haphazard  way,  and 
often  no  minutes  of  them  were  taken.  If  an  important  change 
was  to  be  made,  perhaps  a  meeting  would  be  called;  or  it 
might  happen  that  the  managers  most  interested  in  it  would 
have  an  informal  meeting  at  the  works,  when  the  matter  would 
be  decided.  The  old  minute-books  of  the  various  companies 
often  show  a  gap  of  several  months  without  an  entry. 

275 


THE  CORPORATE   MIND 

With  the  accession  of  Mr.  Frick  to  the  headship  of  the 
concern,  this  was  promptly  changed.  A  rule  was  made  that 
the  Board  of  Managers  should  meet  every  Tuesday  at  lunch,  and 
that  a  full  report  of  their  subsequent  deliberations  should  be 
kept.  Similarly  every  Saturday,  at  noon,  the  different  super- 
intendents and  their  assistants,  some  foremen,  purchasing  and 
sales  agents  and  their  principal  assistants,  to  the  number  of 


Superintendents  at  lunch. 

thirty  or  more,  met  about  a  larger  table,  and,  after  lunching  to- 
gether, talked  over  all  matters  of  common  interest.  Here  the 
unfriendly  rivalry  of  former  times  gave  place  to  a  spirit  of  good 
fellowship  and  mutual  helpfulness.  Around  the  friendly  board 
it  was  impossible  for  two  important  officers  to  refuse  to  speak 
to  each  other  for  five  years,  as  happened  more  than  once  in  the 
past.  And  such  competition  as  grew  up  among  them  was  that 
of  friends  animated  by  a  common  purpose — to  do  the  best  each 
could  for  the  association. 


MINUTES   OF  A    BOARD   MEETING  277 

Of  course  none  but  officials  were  ever  admitted  to  these 
meetings ;  and  the  results  of  their  deliberations  were  kept  in 
profound  secrecy.  Except  for  the  copies  of  the  minutes  sent 
to  Mr.  Phipps  and  Mr.  Carnegie,  the  records  were  never  seen 
by  any  one  not  entitled  to  attend  the  meetings  in  person.  To 
give  completeness  to  this  narrative,  however,  and  to  illustrate 
in  a  practical  way  the  workings  of  the  corporate  mind,  the 
official  record  of  one  of  these  meetings  is  here  given.  Nothing 
has  been  changed  in  it,  except  that  a  long  statement  made  by 
Mr.  Frick  is  omitted.  This  concerned  the  proposed  sale  of  the 
Carnegie- Frick  companies,  or  in  default  of  a  sale,  their  consoli- 
dation. It  is  referred  to  elsewhere.  In  other  respects  the  fol- 
lowing is  an  exact  reproduction  of  the  official  minutes  of  a  meet- 
ing held  in  January,  1899.  It  is  possible  that  many  readers 
will  find  an  intrinsic  interest  in  the  discussions  of  these  "young 
geniuses  " — some  of  whom,  by  the  way,  have  already  reached 
the  dignity  of  grandsires. 

.     At  a  meeting  of  the  Board  of  Managers  of 
THE   CARNEGIE    STEEL    COMPANY,    LIMITED, 

held  at  the  general  offices  of  the  Association,  Carnegie  Build- 
ing, Pittsburg,  Pa.,  at  12  -.30  P.M.,  on  Monday,  January  16,  1899, 
there  were  present  MM.  Frick  (chairman),  Singer,  Schwab, 
Peacock,  Phipps,  Clemson  and  Lovejoy  (secretary);  also  MM. 
George  Lauder,  James  Gayley  and  H.  P.  Bope.  (Mr.  Curry  in 
Pasadena;  Mr.  Wightman  in  Florida.) 

The  minutes  of  the  meeting  of  the  Board  of  Managers  held 
January  loth  were  read,  and,  on  motion,  approved. 

The  following  communication  from  the  president  to  the 
Board,  under  date  of  January  I2th,  was  read : 

"  As  reported  by  Mr.  Phipps  last  week,  we  have  finally 
closed  for  the  purchase  of  the  Bethlehem  Plate  Mills,  which 
purchase  the  Board  has  already  approved. 

"  The  Mills,  as  you  are  aware,  comprise  a  Slabbing  Mill  of 
the  latest  design;  a  128"  Plate  Mill,  complete  in  every  particu- 
lar; and  a  42"  Universal  Mill  of  the  latest  and  best  construc- 
tion. There  are  no  changes  in  all  these  Mills  we  would  suggest. 


2;8  THE    CORPORATE  MIND 

"We  should  have  a  capacity  of  12  to  14,000  tons  of  Plates 
out  of  these  Mills,  besides  some  excess  of  Slabs  which  could 
be  sold  outside. 

"  It  is  estimated  that  the  cost  of  putting  these  Mills  in  oper- 
ation; foundations,  buildings,  furnaces,  etc.,  will  be  approxi- 
mately $500,000.00,  and  would  like  the  Board  to  authorize  this 
expenditure." 

The  following  communication  from  W.  E.  Corey,  general 
superintendent,  Homestead  Steel  Works,  to  the  president,  un- 
der date  of  January  1 1  th,  was  read : 

"The  building  of  ten  (10)  new  Furnaces  at  Open  Hearth 
No.  3  will  cost  about  $80,000.00  per  Furnace,  or  a  total  of 
$800,000.00.  This,  of  course,  includes  all  cranes,  tracks,  grad- 
ing, filling  in,  etc.,  and  also  a  stripper  for  the  stripping  of  large 
Ingots  for  the  new  Slabbing  Mill. 

"Kindly  authorize  the  expenditure  of  this  money,  and 
oblige." 

The  following  communication  from  the  president  to  the 
Board,  under  date  of  January  I2th,  was  read: 

"  The  demand  for  Open  Hearth,  instead  of  Bessemer  Steel, 
is  increasing  each  day.  A  careful  calculation  would  indicate 
that  ten  (10)  additional  Open  Hearth  Furnaces  are  necessary 
for  our  Homestead  Steel  Works. 

"  Enclosed  please  find  Mr.  Corey's  estimate  and  recom- 
mendation for  same. 

"  We  would  propose  making  the  Furnaces  identical  in  every 
particular  with  those  now  built,  which  have  been  very  satisfac- 
tory. 

"  Would  recommend  that  the  Board  permit  me  to  proceed 
with  the  erection  of  these  Furnaces  at  once.  They  can  be 
completed  within  about  five  months." 

MM.  Phipps  and  Clemson  moved  the  authorization  of  an 
appropriation  of  $1,300,000.00,  in  accordance  with  the  recom- 
mendations of  the  president. 

Mr.  Frick:  "That  cost  appears  high." 

Mr.  Schwab:  "Mr.  Corey  admits  that  it  is  high,  but  does  not 

want  to  get  caught  again  with  an  insufficient  appropriation. 

He  will  not  waste  money,  and,  if  all  is  not  needed,  so  much 

the  better." 


COSTLY  ADDITIONS  AUTHORIZED  279 

Mr.  Frick  :  "  We  must  have  the  Furnaces  anyway,  and  may  as 
well  appropriate  the  outside  cost.  These  are  large  amounts, 
but  the  whole  matter  has  been  thoroughly  discussed  outside 
of  the  Board  Meetings,  and  all  appear  satisfied." 

Mr.  Schwab:  "These  Furnaces  will  increase  our  capacity  30,- 
ooo  tons  of  Open  Hearth  Ingots  per  month.  This  pur- 
chase renders  it  unnecessary  to  build  the  Plate  Mill  which 
was  agreed  upon,  although  no  appropriation  was  author- 
ized when  we  discussed  the  Car  Works.  There  is  no 
Plant  I  know  of  so  well  equipped  as  this.  It  is  the  latest 
and  best  in  Plate  Mills." 

Mr.  Lauder:  "  It  is  the  right  thing  to  do." 

The  motion  was  adopted ;  the  vote  being  unanimous,  and 
all  present  concurring. 

The  following  communication  from  W.  E.  Corey  to  the 
president,  under  date  of  December  3Oth,  was  read : 

"  In  line  with  my  conversation  with  you  concerning  the 
changes  in  Beam  Yard,  beg  to  make  the  following  report.  In 
the  first  plan  as  proposed  in  my  letter  of  November  i8th,  it 
will  necessitate  the  expenditure  of  $40,000.00,  and  would  en- 
able us  to  make  an  average  delivery  of  10  days  time  on  all 
Beam  and  Channel  orders. 

"  Under  this  arrangement  30^?  of  all  Beams  and  Channels 
would  be  cut  from  stock,  which  would  increase  the  cost  per  ton 
on  Beams  and  Channels  shipped  from  Homestead  eight  cents 
per  ton. 

"  Now  in  going  over  this  matter  the  second  time,  it  seems 
to  me  that  it  would  not  be  a  paying  investment  to  spend  $40,- 
ooo.oo  and  increase  the  cost  of  production,  if  there  is  any  other 
alternative. 

"  Now  if  our  customers  could  be  satisfied  with  an  average 
delivery  of  1 5  days  on  all  orders,  I  would  recommend  that  noth- 
ing be  done  towards  this  expenditure  for  another  year,  or  until 
it  is  decided  to  move  the  Fitting  Shop. 

"  I  would,  therefore,  ask  that  you  authorize  an  expenditure 
in  the  Beam  Yard  of  $15,000.00,  to  be  expended  as  follows: 
$6,000.00  each  for  two  ten  ton  electric  traveling  cranes,  one  to 
be  placed  immediately  outside  the  40"  Mill  at  the  roadway,  and 
the  other  at  No.  3  roadway  to  handle  material  from  the  small 
saw;  $3,000.00  to  be  spent  in  moving  small  saw  40  feet  due 
west  from  the  present  location,  and  making  necessary  change 
in  tracks. 


280  THE   CORPORATE   MIND 

"  This  would  enable  us  to  make  1 5  day  deliveries  without 
increasing  the  cost  of  production. 

"  Kindly  advise  me  at  your  earliest  convenience  what  you 
think  of  this  proposition." 

Mr.  Schwab :  "  These  are  only  additional  Cranes  for  the  Beam 
Yard  equipment  we  have  now.  While  we  save  nothing  by 
the  expenditure,  we  save  in  time  of  filling  orders." 

Mr.  Frick :  "Money  spent  in  expediting  delivery  is  well  spent, 
and  especially  now  when  we  expect  so  large  a  business. " 

Mr.  Schwab:  "  When  this  matter  first  came  up  in  November, 
I  was  unwilling  to  recommend  the  expenditure  of  $40,- 
ooo.oo,  and  referred  Mr.  Corey's  letter  back  to  him. 
When  we  rebuild  the  Fitting  Shop,  we  can  spend  the 
$40,000.00  to  very  much  better  advantage.  I  would 
recommend  the  expenditure  of  $15,000.00." 

On  motion,  (Peacock  and  Singer),  the  expenditure  of  $15,- 
ooo.oo,  as  recommended  by  the  president,  was  authorized ;  the 
vote  being  unanimous. 

The  following  letter  from  W.  E.  Corey  to  the  president, 
under  date  of  January  1 1  th,  was  read  : 

"Please  find  below  an  approximate  estimate  of  expenditure 
for  improvements  at  our  Carrie  Furnaces,  as  recommended  by 
Mr.  G.  K.  Hamfeldt,  Superintendent. 

Furnace  with  new  shell,  down-take,  and  dust-catcher  with 
linings,  incline  with  top  arrangement,  hoisting  engine, 
and  one  coke  and  limestone  bin,  with  track  for  stock 
yard,  complete $136,000.00 

Extension  and  relining  of  two  stoves 18,000.00 

One  compound  condensing  blowing  engine,  40"  X  72"  X 
60"  X  84",  with  foundation,  extension  to  Blowing  En- 
gine House,  with  foundations  and  Piping 46,000.00 

Weise  Condenser,  3600  HP,  complete 18,000.00 


Total $218,000.00 

"The  detailed  plans  for  same  have  not  as  yet  been  com- 
pleted, but,  as  soon  as  completed,  I  will  arrange  with  Mr.  Gay- 
ley  to  go  over  them  with  Mr.  Hamfeldt. 

"  Kindly  advise  me  if  you  will  authorize  the  expenditure  of 
this  money." 

MM.  Phipps  and  Clemson  moved  the  authorization  of  an 
expenditure  of  $218,000.00. 


FRICK  TELLS  SECRET  OF  SUCCESS         281 

Mr.  Schwab :  "  This  will  put  Carrie  No.  2  in  practically  the 
same  shape  as  our  other  Furnaces,  and  will  make  the  Fur- 
nace equal  to  "  F  "  or  "G."  It  is  in  this  direction  we 
must  go  in  making  improvements." 

Mr.  Gayley  (In  reply  to  the  chairman) :  "  It  should  increase 
the  product  100  tons  per  day." 

Mr.  Schwab :  "  We  have  no  place  to  use  the  surplus  steam  at 
Carrie,  and  it  will  not  pay  us  to  compound  the  engines 
there  at  present.  We  can  compound  them  later  on,  if  it  is 
found  advantageous." 

Mr.  Singer :  "This  is  a  wise  thing  to  do." 

Mr.  Peacock  :  "  We  should  put  all  our  Furnaces  in  good  shape." 

Mr.  Gayley :  "  I  am  satisfied  we  need  to  do  this." 

Mr.  Clcmson :  "  It  is  a  mistake  to  do  anything  else  but  keep 
our  Furnaces  in  the  best  possible  condition." 

Mr.  Lauder:  "  I  think  it  is  the  right  thing  to  do." 

Mr.  Phipps :  "  We  all  expected  to  do  this  when  we  bought  the 
Plant." 

Mr.  Lovejoy :  "It  is  in  line  with  our  policy,  and  should  be 
done." 

Mr.  Gayley :  "  The  Carrie  Furnace  Company  intended  to  do 
a  part  of  this  work,  if  they  had  not  sold." 

Mr.  Frick  :  "  It  is  a  large  amount ;  but  to  our  willingness  to  spend 
large  amounts  in  improvements^  we  owe  our  success." 

The  motion  was  adopted ;  the  vote  being  unanimous. 

Mr.  Schwab:  "At  a  Meeting  in  New  York  of  our  principal 
Partners  and  Managers,  it  was  decided  that  the  following 
changes  and  new  Interests  should  be  made,  commencing 
with  January  I,  1899;  subject  to  the  approval  of  the 
Board  and  of  the  Shareholders. 

"  It  is  proposed  to  give  \%  to  each  of  the  following : 

W.  B.  Dickson ; 
A.  C.  Case; 
John  McLeod; 
Charles  W.  Baker; 

and  to  give  an  increase  of 

\%  to  James  Gayley ; 
\%  to  D.  M.  Clemson; 
\%  to  A.  M.  Moreland; 
\%  to  L.  T.  Brown ; 
\%  to  J.  E.  Schwab." 


282  THE   CORPORATE   MIND 

On  motion  (Singer  and  Peacock),  the  following  resolution 
was  adopted : 

"Resolved;  That  F.  T.  F.  Love  joy,  Trustee,  be  and  is  now 
hereby  directed,  authorized  and  empowered  to  transfer  out  of 
Trust  '  N '  certain  Capital  of  this  Association,  to  the  per- 
sons and  in  the  amounts  named,  as  follows : 

To  James  Gayley,  \%  or  $27,777.78 ; 
D.  M.  Clemson,  \%  or  41,666.67; 
A.  M.  Moreland,  \%  or  27,777.78 ; 

at  its  Book  Value  at  the  close  of  business  December  31,  1898; 
subject  to  all  of  the  conditions  of  the  "  Iron  Clad  Agreement," 
and  subject  also  to  confirmation  at  the  next  Meeting  of  the 
Shareholders;  and 

"Resolved;  That  having  so  done,  F.  T.  F.  Lovejoy  be 
released  and  discharged  from  any  further  accountability  as  to 
his  Trusteeship  for  the  seven-eighteenths  per  centum  of  the 
Capital  of  this  Association,  the  transfer  of  which  is  authorized 
hereby;" 

the  vote  being  unanimous. 

On  motion,  (Singer  and  Peacock),  the  following  resolution 
was  adopted : 

"Resolved ;  That  F.  T.  F.  Lovejoy,  Trustee,  be  and  is  now 
hereby  directed,  authorized  and  empowered  to  transfer  out  of 
Trust  '  N  '  certain  Capital  of  this  Association,  to  the  Trust 
Accounts  and  in  the  amounts  named,  as  follows : 


To  Trust  "  W  "      for  L.  T.  Brown,      \%  of  \%  or  $27,777.77 ; 


To  Trust  "  AB  "  for  J.  E.  Schwab, 

To  Trust  "  AE  "  for  W.  B.  Dickson, 

To  Trust  "  AF  "  for  A.  C.  Case, 

To  Trust  "  AG  "  for  John  McLeod, 

To  Trust  "  AH  "  for  Chas.  W.  Baker, 


or  55,555-55; 

or  27,777.78; 

or  27,777.78; 

or  27,777.78; 

or  27,777.78; 


the  same  having  been  sold  to  the  said  persons  at  Book  Value 
December  31,  1898;  subject  to  all  of  the  conditions  of  the 
'  Iron  Clad  Agreement,'  and  subject  also  to  confirmation  at 
the  next  Meeting  of  the  Shareholders  " ; 

the  vote  being  unanimous. 


Of  THE 

UNIVERSITY 


THE    CONNEAUT   TUBE  PROJECT  283 

Mr.  Schwab :  "  As  the  members  of  the  Board  are  aware,  I  go 
East  tonight  and  sail  for  Southampton  on  Wednesday, 
expecting  to  be  back  here  April  4th.  During  my  absence, 
the  plans  for  the  new  Car  Works  will  proceed  without  any 
delay,  and  be  ready  with  actual  bids  for  aft- the  machinery 
and  other  Contract  items  by  April  1st,  when  an  estimate 
of  the  cost  will  be  given  to  the  Board  and  an  appropriation 
asked  for.  No  expenditure  will  be  necessary  meantime." 

(In  reply  to  the  chairman)  : 

"  I  have  not  figured  closely  on  the  cost  at  all,  but  would 
say  in  round  figures  the  Works  will  cost  from  $750,000.00 
to  $1,000,000.00." 

Mr.  Peacock:  "I  think  while  we  are  on  the  subject  of  Car 
Works,  it  would  be  well  to  consider  our  present  position 
with  the  new  Steel  Car  combination.  They  have  already 
approached  us  on  the  subject  of  a  Contract,  and  would  be 
willing  to  buy  probably  1,000  tons  of  Steel  per  day,  pro- 
vided we  stay  out  of  the  Steel  Car  business.  I  think, 
under  a  favorable  Contract,  I  would  favor  this,  especially 
since  they  are  re-organized,  and  will  be  in  good  financial 
condition  and  safe  to  sell  to." 

Mr.  Schwab :  "  I  do  not  think  anything  should  prevent  our 
going  ahead  with  our  Car  Works. " 

Mr.  Clemson :  "  There  is  room  for  two,  and  they  will  have  to 
come  to  us." 

Mr.  Phipps :  "  I  would  favor  going  ahead." 

Mr.  Lander:  "  It  would  bear  some  thought,  but,  on  the  whole, 
I  think  I  would  go  ahead  with  the  Works." 

Mr.  Singer:  "I  think  we  should  go  ahead  with  our  plans,  but 
I  am  a  little  inclined  to  agree  with  Mr.  Peacock.  There 
is  a  great  deal  of  detail  connected  with  the  Car  business, 
and  we  will  probably  make  as  much  money  if  we  sell  the 
Plates  as  if  we  turned  the  Plates  into  Cars  and  sold  them." 

Mr.  Gay  ley :  "  I  would  go  ahead  with  the  Works." 

Mr.  Clemson :  "  I  would  build  the  Car  Works,  and  would  also 
look  into  the  Steel  Pipe  business.  I  believe  there  is 
money  in  that." 

Mr.  Lovejoy :  "  I  think  we  should  go  ahead  with  the  Works, 
believing  we  can  sell  both  Plates  and  Cars,  and,  having  the 
Car  Works,  we  can  compel  Schoen-Fox  to  buy  from  us." 

Mr.  Frick :  "  Is  our  Car  as  good  as  the  Schoen  or  Fox  car?  " 

Mr.  Schwab :  "  I  think  it  is  better,  but  it  is  heavier.  We 
expect  to  improve  on  it,  and  I  believe  we  can  make  it  as 


284  THE    CORPORATE   MIND 

light  as  theirs,  and,  at  the  same  time,  a  better  and  stronger 
Car." 

Mr.  Frick  :  "  I  am  strongly  in  favor  of  going  ahead.  There 
will  be  room  for  both." 

Mr.  Clemson :  "  We  brought  in  some  good  Gas  Wells  during 
the  latter  part  of  December,  and  are  now  in  as  good  shape 
for  Gas  as  we  were  this  time  last  year.  I  will  guarantee  a 
sufficient  supply  of  Gas  for  this  year." 

Mr.  Frick:  "That  is  very  gratifying  news." 

At  this  point,  Mr.  Clemson  withdrew  from  the  meeting, 
having  been  called  as  a  witness  in  a  case  pending. 

A  letter  from  Andrew  Carnegie  to  the  president,  under  date 
of  December  soth,  was  read,  as  follows : 

"  Several  times  I  have  been  upon  the  point  of  writing  you 
about  settling  with  James  C.  Carter,  the  lawyer  here. 

"  We  consulted  him  in  regard  to  our  claim  against  the  Gov- 
ernment for  remission  of  fine  imposed  [for  supplying  defective 
armor-plate].  I  suppose  it  is  the  general  feeling  that  we  had 
better  not  disturb  that  question,  better  just  let  it  pass.  If  you 
find  this  to  be  so  in  the  Board,  then  I  should  like  a  note  to  be 
written  to  Mr.  Carter  stating  that  we  do  not  wish  the  case  pur- 
sued any  further  and  to  send  us  his  bill.  His  address  is  No. 
277  Lexington  avenue." 

Mr.  Frick :  "  Suppose  Mr.  Phipps  should  write  to  Mr.  Carter 
in  effect  as  follows : 

" '  We  have  not  yet  decided  whether  or  not  we  wish  to 
abandon  our  claim,  but,  should  we  decide  to  press  it,  we 
would  wish  to  retain  him.  Meantime,  however,  as  the 
case  has  been  hanging  fire  for  some  time,  we  would  be 
glad  to  have  a  bill  for  his  services  to  date,  which  we  will 
pay.' 

"That  complies  with  Mr.  Carnegie's  wish,  and,  at  the 
same  time,  does  not  close  the  matter  absolutely." 

This  met  with  general  approval,  and,  on  motion,  the  matter 
was  so  decided  upon. 

Mr.  Frick :  "  I  would  like  to  ask  Mr.  Peacock  if  he  is  selling 
much  Material  today,  and  if  he  is  getting  advanced 
prices  ? " 


AN  INTERESTING   CONTRACT  285 

Mr.  Peacock :  "I  think  the  only  increase  in  Billets  sold,  shown 
in  our  statements  during  the  last  four  weeks  has  been 
where  we  have  sliding  scale  Contracts.  We  have  today 
nothing  to  sell  but  Structural  Material,  on  which  we  are 
getting  good  prices. 

"  We  have  under  consideration  a  Contract  with  the 
American  Tin  Plate  Company  of  New  Jersey,  which  has 
been  agreed  to,  subject  to  the  action  of  the  Board." 

The  Contract  was  read  in  full,  the  features  thereof  being : 

Quantity:  125,000  gross  tons  of  Tin  and  Black  Plates, 
Bars  (not  including  Sheet  Bars)  per  year,  for  a  period  of  Five 
(5)  years,  from  July  I,  1899,  and  thereafter  until  after  One 
year's  written  notice,  which  may  be  given  by  either  party,  on 
or  after  July  I,  1903. 

The  amount  to  be 
added  to  the  price 
of  Pig  Iron  for 

When  the  Price  of  Pig  Sheet   Bars  shall 

iron  per  gross  ton  is  :  be  : 

$  8.99  or  under. ; $5-45 

9.00  to    9.99  5.60 

10.00  "  10.99 5-75 

ii. oo  "  11.99. . . 6.00 

12.00  "  13.99 ••'•  6-25 

13.00  "  14.99 6-5o 

13.00  "  14.99 •  6-75 

15.00  "  15.99  7.00 

1 6. oo  or  over , 7.25 

Price  to  be  fixed  monthly  and  averaged  for  six  months. 

Payments :  Cash  on  the  2Oth  of  each  month. 

Deliveries :  Approximately  10,416  tons  per  month. 

Buyer  may  specify  up  to  iofo  Basic  Open  Hearth  at  1.50 
per  ton  advance. 

Buyers  may  not  re- sell  without  first  putting  Material  through 
a  process  of  manufacture. 

Sellers  agree,  so  long  as  the  Buyers  perform  their  part  of 
this  Contract  "  They  will  not  sell  to  any  competitive  person  or 
Company  in  the  United  States,  Tin  or  Black  Plate  Bars  of  the 
character  covered  by  this  Contract;"  and  Sellers  agree  "Not 
to  enter  into  competition  with  The  Carnegie  Steel  Company, 
Limited,  in  any  of  the  products  which  The  Carnegie  Steel 
Company,  Limited  manufactures,  during  the  life  of  this  Con- 
tract." 


286  THE    CORPORATE    MIND 

Buyers  also  agree,  if  their  capacity  be  increased,  Sellers 
shall  have  the  privilege  of  selling  the  same  proportion  of  the 
new  requirements. 

Any  dispute  as  to  price  to  be  referred  to  A.  H.  Childs. 

Mr.  Frick :  "  Would  it  not  be  well  to  have  all  matters  of  dis- 
pute under  this  Contract  referred  to  an  Arbitrator  ?  " 

Mr.  Peacock :  "  It  might  be,  although  our  Attorneys  advise  us 
our  position  is  better  if  we  do  not  agree  to  defer  all  mat- 
ters to  an  Arbitrator,  since  we  would  probably  be  com- 
pelled to  appeal  to  the  Courts  to  sustain  the  award  of  an 
Arbitrator,  and  we  might  as  well  fight  out  the  whole  thing 
in  Court." 

Mr.  Frick  :  "  I  do  not  agree.  The  decision  of  an  Arbitrator  is 
usually  binding  and  conclusive  among  reputable  business 
concerns." 

All  spoke  in  favor  of  the  making  of  this  Contract,  and,  on 
motion,  (Schwab  and  Phipps),  its  execution  was  authorized ;  the 
vote  being  unanimous. 

Mr.  Peacock :   "This  represents  25$  of  their  total  requirements 

of  last  year." 
Mr.  Schwab  :  "  It  is  more  than  double  what  we  sold  last  year." 

Mr.  Peacock :  "  We  have  in  process  of  negotiation  a  Contract 
with  the  National  Transit  Company  for  Plates,  but  it  is 
not  quite  in  shape  to  report  to  the  Board.  It  also  is  a 
sliding  scale,  and  on  $10.00  Pig,  gives  us  $1.15  for  Sheared 
Plates." 

Mr.  Schwab  (In  reply  to  the  chairman) : 

"That  would  give  us  $8.00  per  ton  profit." 

On  motion,  (Phipps  and  Schwab),  the  making  of  this  Con- 
tract was  left  with  Mr.  Peacock,  with  power  to  act. 

MM.  Gayley  and  Clemson,  appointed  as  a  Committee  De- 
cember 1 3th,  made  the  following  report : 

"The  Committee  appointed  to  investigate  the  property  of 
the  Pittsburg  &  Conneaut  Dock  Company,  at  Conneaut  Har- 
bor, Ohio,  to  determine  if  land  was  available  for  the  erection  of 
a  Blast  Furnace  Plant,  would  report  as  follows : 

"  A  number  of  plans  have  been  prepared  to  determine  the 
best  location,  and  with  such  plans  before  us  a  personal  inspec- 


288  THE    CORPORATE   MIND 

tion  of  the  property  was  made  during  the  past  week.  The  plot 
selected  is  just  east  of  the  present  coal  unloading  slip.  The 
new  drawbridge  crossing  the  creek  to  the  new  dock  will  permit 
the  largest  ore  vessels  to  pass.  At  a  point  on  the  creek  300 
feet  east  of  the  drawbridge  the  vessels  can  turn  into  a  slip, 
which  will  have  to  be  dredged,  which  allows  ample  room  for 
stock  yards  and  furnace  plant  on  the  East  side.  By  this  ar- 
rangement, there  is  obtained  on  the  Western  side  a  strip  of 
ground  400  feet  wide  which  can  be  used  by  the  Dock  Company 
in  further  dock  extensions,  the  length  of  such  dock  can  be  from 
1,000  to  2,000  feet  long  as  found  necessary  to  dredge.  There 
is  provided  in  this  arrangement  ample  room  for  a  furnace  plant 
between  the  slip  and  the  hillside,  and  lengthwise  will  be  found 
room  for  a  number  of  furnaces.  The  low  ground  extending 
along  the  railroad  for  some  distance  affords  an  excellent  space 
for  disposal  of  slag  for  many  years,  or  the  slag  can  just  as  read- 
ily be  conveyed  to  the  upper  end  of  the  new  dock  and  dumped 
into  the  lake,  and  in  this  way  providing  for  dock  extensions. 
There  is  sufficient  flat  land  adjoining  the  furnace  location,  of 
which  the  Dock  Company  owns  part,  which  if  filled  with  slag 
would  be  suitable  for  Steel  Works  and  other  manufactories. 

"  The  slip  your  Committee  had  in  view  for  a  furnace  site 
comprised  about  25  acres,  with  plenty  of  just  as  suitable  prop- 
perty  adjoining. 

"  The  dock  frontage  at  Conneaut  for  discharging  ore  is  as 
follows : 

Old  Dock 1,900  feet. 

Direct  unloading  Dock 1,200    " 

New  Dock  (under  construction) 1,100    " 

Total 4,200    " 

New  Dock  can  be  extended 1 , 100    " 

Furnace  Dock  as  outlined 1 ,000    " 


Making  a  Total  of 6,300  feet. 

and  this  can  be  increased  by  extensions  into  the  lake  and  of  the 
Furnace  slip.  The  above  figures  are  for  ore  unloading  alone, 
and  do  not  include  the  side  of  dock  for  coal  or  rail  unloading. 

"  A  Furnace  at  Conneaut  Harbor  making  300  tons  of  iron 
per  day  would  require  per  annum  100,000  net  tons  of  Coke  and 
40,000  gross  tons  of  limestone." 

Mr.  Frick  :  "  We  will  leave  that  report  on  the  Minutes  for  con- 
sideration, and  take  up  the  matter  at  some  future  time. " 


THE   CONNEAUT  SCHEME  289 

Mr.  Gay  ley :  "  We  have  made  the  following  purchases  of  Man- 
ganese Ore : 
"  Caucasian  Ore : 

"  Everitt  &  Company,  10,000  tons  at  10^  pence,  ship- 
ment March  to  September. 

"F.  Haeberlin,  10,000  tons  at  10^  pence,  shipment 
March  to  October. 

"John   Carr  &   Company,  6,000  tons  at    10^   pence, 
shipment  March  to  May. 
"  Cuban  Ore  : 

"  We  have  purchased  from  the  Ponupo  Mining  &  Trans- 
portation   Company,   their   product   for   this   year   up   to 
25,000  tons  at  24  cents  per  unit,  at  sea-board." 
Mr.  Gayley  (In  reply  to  the  chairman) : 

"  We  have  several  old  Caucasian  Ore  Contracts  at  lower 
prices  than  these,  but  find  it  difficult  to  get  deliveries. 
Making  these  Contracts,  we  will  be  able  to  get  deliveries 
under  both  the  old  and  new  Contracts.  These  prices  on 
Caucasian  Ore  are  up  about  $1.50  per  ton,  while  the  Cu- 
ban Contract  has  come  down  about  $2.00  per  ton.  The 
average  increase  in  the  cost  of  Ferro- Manganese  this  year 
will  be  $1.50  per  ton." 

Mr.  Peacock :  "  But  we  are  getting  from  $4.00  to  $5.00  per  ton 
more  for  Ferro  than  we  did  a  year  ago." 

On  motion,  (Schwab  and  Peacock),  the  purchases  reported 
were  approved,  ratified  and  confirmed. 

Mr.  Gayley :  "  The  Operations  at  Conneaut  Dock,  for  the  five 
days  ending  January  I3th,  were  as  follows: 

Receipts,  None. 

Shipments,  11,3 59  tons. 

(In  reply  to  the  chairman) : 

"Everything  at  the  Docks  will  be  ready  for  next  year's 
business." 

Mr.  Frick :  "  It  would  be  well  to  bear  in  mind  the  necessity  of 
getting  the  Cars  under  Contract  with  the  Schoen  Company 
in  time.  Mr.  Gayley  might  put  a  man  on  to  look  after 
this." 

Mr.  Bope,  as  assistant  general  sales  agent,  submitted  the 
following  report : 


290  THE    CORPORATE   MIND 

STATEMENT  OF  SALES  OF  STANDARD  RAILS  SINCE 
NOVEMBER  18,    1898. 

Sales.             Options  (minimum).  Totals.  • 

Carnegie 326,623                46,000  372,623 

Illinois 342,713                 36,000  378,713 

Cambria 65,266                 65,266 

Colorado 20,698                20,698 


Total 755,300  82,000  837,300 

"  All  of  our  own  sales  above  reported  have  been  included 
in  our  report  of  obligations  following,  although  formal  Contracts 
for  only  197,000  tons  have  been  executed." 

"  The  statement  given  below  compares  our  estimated  obliga- 
tions (for  the  classes  of  material  specified)  at  the  opening  of 
business,  Friday,  January  6  and  January  13,  1899: 

Material.  Jan.  6th.  Jan.  i3th.  Difference. 

Rails 564,110  556,541  Loss    7,569 

Billets,  Blooms,  Sheet 

Bars,  etc 445,227  433,739  Loss  11,488 

Structural  and  Ship  Ma- 
terial   174,564  180,923  Gain  6,359 

Axles  and  Bars 38,110  39,742  "        1,632 

Plates 41,693  46,245  "        4,552 


Total 1,263,704  1,257,190  Loss  6,514 

"All  in  Gross  Tons,  based  on  our  minimum  obligations." 

Mr.  Phipps :  "  As  the  members  of  the  Board  are  aware,  we 
have  been  building  a  foot-bridge  over  the  Railroad  at  Du- 
qijesne,  and  are  asked  to  sign  a  Contract,  agreeing  to  keep 
it  in  good  order." 

On  motion,  (Phipps  and  Schwab),  the  execution  of  such  a 
Contract  was  authorized ;  the  vote  being  unanimous. 

Mr.  Phipps  :  "  We  have  divided  the  Fawcett  Land  into  Lots, 
and  a  plan  has  been  prepared  showing  29  Lots,  on  each 
side  of  the  boulevard.  This  plan  should  be  adopted,  in 
order  that  it  may  be  recorded  in  the  Court  House." 

On  motion,  (Schwab  and  Peacock),  the  plan  submitted  was 
approved  and  adopted ;  the  vote  being  unanimous. 


PROJECT   TO   SELL    OUT  291 

Mr.  Phipps  :  "  Collections  have  been  coming  in  so  freely  that 
we  have  found  it  advisable  to  anticipate  our  Ore  payments, 
up  to  and  including  those  for  March." 

Mr.  Lauder :  "  Referring  to  the  question  of  Lake  freight  on 
Ores :  I  think  we  can  transport  much  cheaper  than  it  is 
being  contracted  for,  by  building  large  barges  and  handling 
these  by  tugs  in  relays,  running  the  business  as  a  Railroad 
would  transport  cars.  The  barges  should  hold  say  10,000 
tons ;  two  barges  per  day  during  the  shipping  season  run- 


Whaleback  ore  steamers  in  port. 

ning  regularly  would  give  us  our  supply,  and  would,  I  be- 
lieve, although  I  have  not  figured  on  it  in  detail,  effect  a 
saving  of  40  to  50$  in  freight  cost." 

Mr.  Frick  :  "  In  this  connection,  I  was  told  by  W.  L.  Brown 
that  they  transported  ore  from  Escanaba  to  South  Chicago 
for  17  cents.  That  should  be  looked  up  by  Mr.  Gay  ley, 
and  we  should  also  bear  Mr.  Lauder 's  suggestion  in 
mind. " 

Mr.  Schwab  :  "  I  think  it  practicable,  but  do  not  see  where  the 
great  saving  would  come  in." 

Mr.  Gayley  :  "The  barges  suggested  are  only  3,000  tons  larger 
than  those  now  in  use.  The  traffic  is  a  little  uncertain 
on  the  Lakes  and  tugs  might  have  to  lie  over  and  lose  time. 
This  is  what  keeps  the  rates  higher  than  they  would  be 


292  THE    CORPORATE  MIND 

otherwise.     The  suggestion  is  worthy  of  investigation,  and 
I  will  take  it  up." 

Mr.  Frick  here  made  the  statement  concerning  the  reorgani- 
zation of  the  company,  and  asked :  "  Whom  will  you  name  as 
the  Committee  ?  " 

On  motion,  (Schwab  and  Singer),  MM.  Frick,  Peacock, 
Phipps  (L.  C.)  and  Lovejoy  were  appointed  as  the  Committee, 
in  charge  of  the  Organization  of  THE  CARNEGIE  COMPANY, 
LIMITED  ;  there  being  no  dissent. 

Mr.  Frick  :  "  The  Committee  will  report  progress  to  the  Board 
from  time  to  time;  meanwhile,  all  should  consider  this, 
and  be  prepared  to  make  suggestions  on  any  points  that 
occur  to  them. 

"  I  may  add  that  the  question  of  Buying  and  Selling 
Value  of  Capital  Stock  in  the  new  Company — that  is,  what 
will  be  paid  to  retiring  Partners,  or  what  will  be  paid  by 
new  Shareholders  admitted — is  having  careful  consider- 
ation, will  be  fixed  on  a  fair  basis,  and  will  be  set  forth  in 
an  Agreement  similar  to  our  present  '  Iron  Clad  Agree- 
ment,' to  be  signed  when  the  new  Company  takes  posses- 
sion." 

On  motion,  adjourned. 

(Signed)  LOVEJOY, 

Secretary. 
Approved  at  meeting  held, 


Chairman  Board  of  Managers. 

Copy  to  A.  C.,  New  York; 

H.  P.,  Jr.,  Washington,  D.  C. ; 

H.  M.  C.,  Pasadena. 
17  January,  1899. 


CHAPTER    XIX 


THE   ZENITH   OF    PROSPERITY 

JH^^^^  IN     1889     negotiations     were 

entered  into  by  Andrew  Car- 
negie   with    certain    English 
bankers  and  capitalists  with 
a  view  of  selling   out  the 
iron  and  steel  enterprises  with 
which    he    was    connected.      At 
that  time  British  investors  were 
absorbing     American     industrial 
stocks   with   astonishing    avidity;    and 
Carnegie,  believing  the  zenith  of  pros- 
perity had    been    reached    in    his    own 

business,  thought  the  time  an  opportune  one  to  sell  out  to 
the  English.  The  project  was  resisted  by  Mr.  Phipps,  who 
had  sold  seven-eighteenths  of  his  interest  the  previous  year; 
but  he  finally  yielded  to  his  partner's  insistence  and  gave  a 
reluctant  consent  to  the  sale  of  the  properties. 

So  far  as  could  be  seen  at  the  time,  Carnegie's  lack  of  faith 
in  the  future  was  justified.  Three  years  before,  the  profits  of 
the  several  companies  had  amounted  to  nearly  three  million  dol- 
lars. In  1887  they  aggregated  close  on  three  and  a  half  mill- 
ions. Then  in  1888  they  dropped  to  $1,941,555;  and  it 
seemed  a  prudent  measure  to  slip  out  of  the  business  on  what 
looked  like  the  passing  boom  of  1889.  The  negotiations,  how- 
ever, had  no  satisfactory  result;  and  Mr.  Phipps,  hearing  of 
their  failure,  expressed  his  relief.  Incidentally  he  gave  ex- 
pression to  his  opinion  on  the  impropriety  of  selling  out  to  a 

293 


294  THE  ZENITH  OF  PROSPERITY 

trust — an  opinion  that  makes  strange  reading  nowadays.     Here 
is  the  beginning  of  the  letter  he  wrote  to  Mr.  Carnegie : 

GRAND  UNION  HOTEL 

Dresden,  Saxony, 

Nov.  i,  1889 
DEAR  ANDREW 

Few  pleasures  on  a  foreign  trip  are  equal  to  a  friendly  letter 
from  home  like  yours  of  the  i8th. 

I  am  gratified  that  we  are  not  to  go  out  of  business,  and 
especially  to  make  room  for  a  trust,  which  is  by  no  means  a 
creditable  thing.  As  you  say  the  tariff  would  be  repealed  on 
rails  and  rightly  so. 

With  Mr.  Frick  at  the  head,  I  have  no  fear  as  to  receiving 
a  good  return  upon  our  capital.  Being  interested  in  manufac- 
turing keeps  us  within  touch  of  the  world  and  its  affairs  in- 
stead of  being  on  the  shelf.  Of  course  I  am  anxious  that 
you  should  not  be  worried  by  the  business — only  pleasantly 
interested.  .  .  . 

Yours  truly 

H.    P.   Jr. 

It  was  a  very  fortunate  thing  for  Carnegie,  Phipps/and  all 
the  partners  that  the  project  failed;  for  in  1889  the  profits  of 
the  year  amounted  to  $3,540,000,  the  largest  up  to  that  date  in 
the  history  of  the  various  enterprises,  despite  the  fact  that  rails 
were  down  to  their  lowest  point,  $29.25.  Next  year's  profits 
were  $5,350,000.  The  effect  of  Mr.  Frick's  management  was 
beginning  to  be  seen.  In  1891,  owing  to  dwindling  prices  and, 
in  larger  measure,  to  excessive  cost  of  labor  at  Homestead,  there 
was  a  falling  off  of  a  million  dollars ;  and  a  still  further  reduc- 
tion took  place  in  1892,  the  year  of  the  strike.  The  profits  this 
year  were  only  $4,000,000.  In  1893 — panic  year — a  further 
reduction  of  a  million  dollars  was  recorded;  and  this  marked 
the  bottom.  Thenceforward  the  annual  balance  sheets  showed 
an  ever-increasing  profit,  regular  and  slow  at  first,  then  by 
extraordinary  leaps  and  bounds.  Here  is  the  gratifying 
record : 


PROFITS  NOW  FIRST  PUBLISHED  295 


NET  PROFITS  OF  THE  CARNEGIE  ASSOCIATIONS,  CARNEGIE 
BROTHERS  &  CO.,  LTD.  (TO  1892),  CARNEGIE,  PHIPPS  &  CO., 
LTD.  (TO  1892),  AND  THE  CARNEGIE  STEEL  COMPANY, 
LTD.  (FROM  JULY,  1892). 


1889 $3,540,000* 

1890 5,350,000 

1891 4,300,000 

1892 4,000,000 

1893 3,000,000 

1894 4,000,000 


1895 $5,000,000 

1896 6,000,000 

1897 7,000,000 

1898 11,500,000 

1899 21,000,000 

plus  $4,500,000  reinvested. 


These  sums,  added  to  those  given  on  a  previous  page  for  the 
years  1875  to  1888  inclusive,  bring  the  aggregate  net  profits  of 
all  the  Carnegie  associations  to  the  impressive  total  of  $93,-  ^ 
391,005.41.     In  the  year   1900 — the  last  of  its  separate  exist-  - 
ence — the   Carnegie   Steel  Company  made  a  profit  of  nearly 
$40, 000,000,  and  a  sum  was  taken  from  the  Contingency  Fund    . 
to  bring  it  up  to  this  even  figure. 

It  is  believed  by  the  Carnegie  officials,  and  with  some  show 
of  reason,  that  this  magnificent  record  was  to  a  great  extent 
made  possible  by  the  company's  victory  at  Homestead.  From 
that  time  on  the  firm  profited  by  the  heavy  investments  it  had  - 
made  in  labor-saving  machinery;  and  costs  got  so  low  that  one  , 
year  when  the  Carnegies  made  over  four  million  dollars,  their 
chief  competitor,  the  Illinois  Steel  Company,  had  upwards  of  a 
million  dollars'  loss.  The  following  year  the  Carnegies  made 
over  five  millions,  while  the  Chicago  company  made  only  $360,- 
ooo.  By  1897  the  cost  of  steel  rails  on  gars  at  the  Braddock 
mill  was  only  $12  a  gross  ton! 

One  of  the  most  marked  economies  in  production  resulted 
soon  after  the  Homestead  strike,  when  Mr.  Frick  created  a  posi- 


*  At  this  date  a  change  was  made  in  the  method  of  accounting,  by  which  the 
odd  sums  were  dropped  from  Profit  and  Loss  and  put  into  a  "  Contingency  Fund." 
Later  any  amount  under  half  a  million  was  so  disposed  of  ;  and,  on  the  other  hand, 
when  the  Profit  and  Loss  account  showed  an  odd  sum  of  more  than  half  a  million, 
enough  was  borrowed  from  the  Contingency  Fund  to  make  the  total  balance  in 
even  millions.  That  is  why,  on  another  page,  the  profits  of  the  association  are 
given  to  within  a  cent,  while  here  they  are  stated  in  even  millions. 


296  THE   ZENITH  OF  PROSPERITY 

tion,  without  any  distinctive  name,  for  Mr.  P.  R.  Dillon,  who 
had  done  such  excellent  work  at  the  Union  Iron  Mills  and  at 
Beaver  Falls.  His  duties  were  advisory,  covering  mechanical 
as  well  as  labor  equipment,  and  extended  to  every  department 
of  the  company's  service.  By  skilful  adjustments  he  increased 
the  capacity  of  one  group  of  workers  after  another,  here  adding 
a  man,  there  taking  two  away;  in  one  place  gearing  up  the 
machinery,  in  another  reducing  it,  until  a  high  degree  of  me- 
chanical perfection  was  reached,  and  there  was  not  a  super- 
fluous wage-earner  in  the  shops.  At  Homestead  alone  five 
hundred  men  were  thus  saved ;  and  in  all  the  Carnegie  works 


The  Carrie  Furnaces. 

the  reductions  amounted  to  over  fifteen  hundred  workmen. 
And  this  without  diminishing  the  output  of  a  single  group. 
Indeed,  the  better  practice  thus  resulting  soon  brought  back  the 
displaced  men ;  and  the  tonnage  of  the  works  increased  more 
rapidly  than  ever  before.  The  increase  between  1893  and  1894 
amounted  to  almost  as  much  as  the  entire  output  of  the  works 
in  1888,  and  exceeded  it  the  following  year. 

During  these  years  and  those  immediately  following  them 
the  growth  of  the  several  works  was  nothing  less  than  phenome- 
nal. No  great  expansion  was  possible  at  the  older  establish- 
ments, such  as  the  Union  Iron  Mills  and  the  Lucy  Furnaces; 
but  at  Braddock,  Homestead,  and  Duquesne  additions  were 
made  every  year  greater  than  the  entire  plant  had  been  a  short 


AMAZING   RECORD    OF  GROWTH 


297 


time  before.  At  Homestead  one  set  of  open-hearth  furnaces 
was  rapidly  added  after  another,  and  new  mills  erected  to  finish 
the  increased  output  of  steel.  In  one  case  only  sixty  days  in- 
tervened between  the  turning  of  the  first  sod  and  the  casting  of 
an  ingot  on  the  same  spot.  The  two  Carrie  furnaces,  just 
across  the  river,  were  bought  by  Mr.  Frick  with  his  usual 
issue  of  bonds,  and  the  bonds  liquidated  out  of  profits.  Later 
two  other  furnaces  were  added;  and  these  great  stacks  have 
broken  the  world's  record  for  yearly  tonnage.  At  Duquesne 
the  same  nervous  activity  was  displayed.  Four1  huge  blast- 
furnaces were  built  to  supply  the  metal  required  by  the  exten- 
sive open-hearth  plant  that  soon  supplemented  the  two  Besse- 
mer converters  which  Mr.  Frick  found  there  when  he  bought 
the  works.  At  the  Edgar  Thomson  works  almost  every  year 
witnessed  an  addition  to  its  great  battery  of  blast-furnaces,  un- 
til Kloman's  little  Escanaba  stack  was  but  as  a  single  letter  in 
half  the  alphabet.  Here,  expressed  in  gross  tons  of  steel  in- 
gots made,  is  the  great  record  of  the  growth  of  the  combined 
business  of  these  plants  under  the  management  of  Henry  C. 
Frick : 


1888 332,111 

1889 536,838 

1890 660,071 

1891 797,286 

1892 877,602 

1893.  863,027 


1894 1,115,466 

1895 1,464,032 

1896 1,375,249 

1897 1,686,377 

1898 2,171,226 

1899 2,663,412 


The  import  of  these  statistics  is  seen  by  a  comparison.  In 
1885  Great  Britain  led  the  world  in  the  production  of  steel. 
Her  total  output  for  that  year  was  695,000  tons  less  than  the 
product  of  the  Carnegie  Steel  Company  in  1899. 

During  this  period  the  H.  C.  Frick  Coke  Company,  while 
still  supreme  in  its  field,  had  not  expanded  with  anything  like 
equal  rapidity.  This  was  partly  because  it  was  already  great 
enough  to  supply  the  Carnegie  demands  twice  over,  and  partly 
because  its  profits  and  credits  had  been  used  to  develop  the 
steel  company.  Beginning  as  early  as  1888,  during  the  Edgar 


298  THE   ZENITH  OF  PROSPERITY 

Thomson  strike,  the  credit  of  the  coke  company  had  been  con- 
tinuously used  to  strengthen  the  steel  companies  ;  and  ambitious 
as  Mr.  Frick  was  to  put  the  latter  concerns  at  the  head  of  the 
steel-producing  establishments,  not  only  of  America,  but  of  the 
world,  he  let  the  profits  of  his  own  special  business  go  into 
blast-furnaces  and  open-hearth  plants,  when  his  personal  promi- 
nence would  have  been  furthered  by  putting  them  into  coal 
lands  and  new  ovens. 

In  1899  the  H.  C.  Frick  Coke  Company  owned  40,000  of 
the  60,000  acres  of  unmined  coal  land  in  the  Connellsville  re- 


Shoveling  ore  from  its  native  bed  into  cars. 

gion,  20,000  acres  of  surface  land,  11,000  coke-ovens,  2,500 
railroad-cars,  and  3,500  dwellings.  Its  capital  was  $10,000,- 
000,  of  which  Andrew  Carnegie  personally  owned  a  little  over 
one-quarter,  the  Carnegie  Steel  Company  about  the  same,  and 
the  rest  was  held  by  Mr.  Frick  and  a  number  of  smaller  own- 
ers, of  whom  the  principal  ones  were  Mrs.  T.  M.  Carnegie  and 
Mr.  John  Walker.  It  was  in  no  way  affiliated  with  the  Car- 
negie Steel  Company,  except  that  it  worked  in  harmony  with  it. 
At  times  the  necessities  of  the  latter  conflicted  with  its  proper 


MORE    SCHEMES    TO   SELL    OUT  299 

interests,  and  then  these  had  to  give  way  to  the  Carnegie  con- 
trol. 

Ten  years  having  elapsed  since  the  failure  of  the  attempt  to 
sell  the  works  to  English  investors,  new  schemes  of  a  like  char- 
acter were  made  in  1899.  For  a  long  time  past  Mr.  Carnegie 
had  lived  principally  abroad,  and  Mr.  Phipps  had  withdrawn 
from  active  participation  in  the  affairs  of  the  company.  Mr. 
Prick's  had  been  the  guiding  hand  that  had  led  the  concern  to 
a  prosperity  surpassing  the  dreams  of  the  most  sanguine  of  his 
colleagues ;  and  in  all  plans  for  the  future  his  continued  leader- 
ship seemed  a  necessity.  But  Carnegie  was  loath  to  resign  in 
favor  of  one  whose  prominence  threatened  to  overshadow  his 
own;  and  the  plans  he  made  for 'his  own  final  withdrawal  in- 
variably included  the  simultaneous  resignation  of  Frick.  And 
Frick,  full  of  energy  and  not  yet  fifty  years  of  age,  had  no 
thought  of  resigning ;  so  that  the  plans  never  got  beyond  the 
nebulous  stage  until  the  shock  of  litigation  forced  them  into 
some  degree  of  definiteness.  The  result  was  an  illustration  of 
what  Herbert  Spencer  calls  "a  consolidation  effected  by  war." 

Before  dealing  with  this  sensational  suit  and  the  causes 
leading  up  to  it,  a  more  detailed  reference  should  be  made  to 
some  of  these  earlier  schemes  of  consolidating  the  steel  and 
coke  businesses,  and  selling  them  to  outsiders.  This  will  serve 
to  correct  the  prevalent  idea  that  the  sale  which  was  finally 
made  to  Mr.  J.  Pierpont  Morgan  for  the  United  States  Steel 
Corporation  was  due  entirely  to  commercial  conditions,  and  not 
to  any  desire  on  the  part  of  the  Carnegie  people  to  be  rid  of 
their  property. 

Early  in  January,  1899 — to  be  specific,  on  Thursday,  the 
5th  of  that  month — a  meeting  was  held  at  the  house  of  An- 
drew Carnegie  in  New  York,  attended  by  Messrs.  Hy.  Phipps, 
Frick,  Schwab,  Love  joy,  Peacock,  and  Lauder,  for  the  discus- 
sion of  two  questions.  The  first  was  the  price  that  should  be 
named  for  the  properties  of  the  Carnegie  Steel  Company  and 


300  THE  ZENITH  OF  PROSPERITY 

the  H.  C.  Frick  Coke  Company  in  response  to  certain  overtures 
to  purchase  which  had  been  made  by  a  syndicate  of  New  York 
and  Chicago  capitalists.  The  second  question  was  whether  the 
two  companies  should  be  consolidated  in  case  of  a  failure  to 
sell  them,  and  on  what  terms.  Both  matters  were  carefully 
considered;  and  a  decision  to  sell  having  been  reached,  the 
price  of  $250,000,000  was  fixed  upon  for  the  steel  company's 
stock,  "  carrying  with  it  all  that  is  on  its  books/'  including  the 
shares  in  jhe  coke  company.  Payment  was  to  be  made  one- 
half  in  cash  and  one-half  in  fifty-year  five-per-cent.  gold  bonds. 

When  these  terms  were  laid  before  the  syndicate  they  were 
rejected.  While  the  members  did  not  say  so,  they  had  evi- 
dently expected  to  make  a  partial  payment  in  stock. 

A  consolidation  of  the  coke  and  steel  business  was  then 
decided  upon;  and  on  January  I4th  Andrew  Carnegie  wrote  his 
wishes  to  his  cousin,  George  Lauder,  as  follows : 

"Mr.  Rodgers,  Standard  Oil  and  Federal,  said  truly,  'Too 
big  a  dog  to  wag  so  small  a  tail.'  Now  H.  C.  F.  and  I  talked 
over  the  matter.  He  will  proceed  to  get  plan,  new  charter, 
bonds,  etc.,  as  proposed. 

I  wish  you  and  Peacock  and  Lawrence,  Clemson,  Love  joy, 
Gayley,  etc.,  to  decide  whether  you  wish  to  buy  the  other 
Frick  Coke  Company  Stocks  at  $35,000,000.00,  which  Frick 
now  wants ;  or  prefer  to  let  things  stand  as  they  are  with  the 
present  fixed  rate  on  Coke. 

The  Frick  Company  price  was  $30,000,000.00,  if  $75,000,- 
ooo.oo  Mortgage  Bonds  only  made  by  C.  S.  Co.,  and  you  may 
prefer  to  do  this,  or  might  make  the  Mortgage  $100,000,000.00, 
and  only  issue  $75,000,000.00  now,  and  provide  only  the  other 
issue  for  new  property  to  be  acquired,  which  would  be  the  same 
thing  practically  as  the  $75,000,000.00  Mortgage. 

I  am  just  as  willing  to  keep  my  Frick  Company  Stock  as  to 
sell  it  to  C.  S.  Co.,  and  I  suppose  H.  C.  F.  is.  He  can  make 
it  pay  us  more  than  the  interest  on  the  $35,000,000.00. 

You  should  consult  all  the  Managers,  including  Singer,  and 
let  each  state  frankly  his  preference.  Also  ask  Schwab  if  he 
has  not  gone ;  if  he  has,  I  will  see  him  here. 

It  is  a  matter  for  all  of  you  to  decide,  not  for  me.  As  I 
told  you,  C.  S.  Co.  paying  in  Bonds  makes  it  easy  payments — 


CARNEGIE'S  FORECAST  OF  PROFITS        301 

no  cash — which  is  different  from  heavy  yearly  payments  to 
make.  Personally  am  glad  to  have  this  year  to  ourselves  to 
show  what  we  can  do.  If  we  wish  to  sell  out,  believe  me,  we 
can  do  so  ourselves  for  more  than  $250,000,000.00." 

The  reference  to  the  proposed  purchase  of  "  the  other  Frick 
Coke  Company  Stocks  at  $35,000,000"  is  misleading.  The 
price  was  to  include  all  the  stock  of  the  coke  company,  as  is 
shown  by  the  Frick  plan  to  which  Mr.  Carnegie  refers.  The 
clause  relating  to  this  reads  : 

"  The  [projected]  Carnegie  Company  Limited  shall  purchase 
all  the  property  and  business  of  the  H.  C.  Frick  Coke  Com- 
pany, the  Youghiogheny  Northern  Railway  Co.,  Youghiogheny 
Water  Co.,  Mt.  Pleasant  Water  Co.,  Trotter  Water  Co.  and  the 
Union  Supply  Co.  Ltd.  subject  to  all  their  debts,  obligations 
and  engagements,  or  all  of  the  Capital  Stock  of  said  Companies 
as  shall  in  the  consummation  of  the  general  purpose  of  this 
agreement  be  subsequently  deemed  most  desirable  by  the  Com- 
mittee hereinafter  designated,  for  the  sum  of  Thirty-five  million 
dollars  ($35,000,000)  to  be  paid  as  hereinafter  stated." 

In  other  words  the  entire  business  of  the  Frick  Company 
and  all  its  dependencies  was  offered  at  $35,000,000.  This  is 
exactly  half  the  price  paid  for  it  a  year  later  in  settlement  of 
the  famous  litigation. 

Mr.  Frick's  plan,  thus  referred  to,  of  a  company  with  a 
capital  of  $60,000,000  and  a  bond  issue  of  $100,000,000,  was 
not  acceptable  to  Mr.  Carnegie,  who  drew  up  a  prospectus  in 
substitution  of  it,  and  sent  it  with  the  following  letter  to  his 
colleagues  in  Pittsburg.  The  phraseology  of  these  documents 
is  not  very  clear ;  but  in  the  prospectus  the  retirement  of  Mr. 
Frick  is  distinctly  provided  for : 

"WE  (THE  CARNEGIE  STEEL  COMPANY,  LIM- 
ITED, and  the  H.  C.  FRICK  COKE  COMPANY)  [shall] 
make  this  year,  under  the  lowest  prices  on  record,  say  close  to 
$15,000,000.00. 

We  had  only  six  months  of  Carrie  Blast  Furnaces;  aot  six 
months  work  of  the  big  new  Blooming  Mill;  no  Armor  deliver- 


302  THE  ZENITH  OF  PROSPERITY 

ies,  except  for  three  months;  a  loss  of  nearly  $1,000,000.00 
profit. 

Had  these  been  running  as  now  our  net  would  have  been 
beyond  $  1 5 ,000,000.  oo. 

For  1899  •' 

We,  with  half  product,  sold  1,200,000  tons, 
orders  on  our  books,  at  higher  prices  of  at  least 
$  I.  oo  deliveries $1,200,000.00 

We  have  of  Armor — going  to  work  for  years 
ahead — another 1,000,000.00 

Carrie  Blast  Furnaces ;  the  Blooming  Mill  all 
he  year,  another 500,000.00 

If  we  get  $1.00  more  pull  on  the  remaining 
1,200,000  tons 1,200,000.00 


$3,900,000.00 

Our  increased  product  of  Furnaces  and  Mills 
give  us  a  big  increase,  but  there  is  a  gain  of .  .  .  .$4,000,000.00 

Which  might  easily  be  $5,000,000.00. 

Frick  Coke  is  now  making  at  the  rate  of  a 
$1,000,000.00  more  per  year;  even  better  pros- 
pects    1,000,000.00 


$5,000,000.00 

The  Light  Rail  Mill  begins  say  July  ist;  our  new  Mines 
this  year  will  increase  profits  there;  our  big  new  Universal 
Mill  goes  into  operation  say  May  ist. 

Mr.  Fricks  estimate  of , . . .  .  $15,000,000.00 

Frick  and  Superior  Mines  over 5,000,000.00 


Net  for  1 899 $20,000,000.00 

Just  as  likely  to  be  above  as  below,  I  think  more  so,  but 
say  $20,000,000.00. 

In  I()OO  : 

We  had  the  big  Plate  Mill ;  Steel  Car  Shops ;  new  Axle 
Plant;  Car  Wheel  Foundry;  all  arranged  for — came  in  early 
in  1899; — also  two  new  Blast  Furnaces  at  Carrie. 

For  1900,  therefore,  present  conditions  are  good  for  $25,- 
000,000.00.  These  conditions  are  very  low.  Prices  liable  to 
advance  $2.00  to  $5.00  per  ton. 


$37>500>°oo  A    YEAR  303 

The  first  would  give  us  $  5,000,000.00  more,   30, 000,000.  oo 
The  second  12,500,000.00  more,  37,500,000.00 

I  am  certain  that  in  two  years  hence  we  shall  be  on  the 
basis  of  $25,000,000.00  net  yearly,  even  at  low  prices. 

We  have  to  supply  the  world — note  last  week's  British 
advices — less  Ore  this  year  and  last  from  foreign  points ;  great 
scarcity;  prices  wild;  coke  put  to  15/6  [fifteen  shillings  and 
sixpence]  at  Works,  best  grade;  bad  to  get  at  that;  near  $3.75 
per  ton  and  scarce.  Impossible  to  increase  supply  of  either 
Coke  or  Ore. 

Since  we  reach  Atlantic  ports  at  $1.00  per  ton,  we  have 
the  trade  of  the  world. 

I  favor  holding  on  for  two  or  three  years ;  no  question  but 
we  can  sell  our  property  at  $400,000,000.00. 

200,000,000  Bonds  @  5^          =          $10,000,000.00 
200,000,000  Stock  @  6f0  =  12,000,000.00 


$22,000,000.00 
Surplus 3,000,000.00 

We  shall  beat  this — why  then  not  wait.  If  you  wish  to  sell 
now  then  here  is  the  plan.  A.  C." 

(PROSPECTUS) 

THE    CARNEGIE   STEEL   COMPANY,  LIMITED,   and 
'the   H.    C.   FRICK    COKE   COMPANY. 

In  pursuance  of  a  decision  of  long  standing,  the  four  princi- 
pal owners  of  The  Carnegie  Steel  Company,  Limited,  and  the 
H.  C.  Frick  Coke  Company  (MM.  Carnegie,  Phipps,  Frick  and 
Lauder)  now  retire  from  active  business.  To  enable  them  to 
do  so,  and  with  the  approval  of  all  the  younger  Partners,  the 
partnership  has  been  changed  to  a  corporation — Capital  $300,- 
000,000.00. 

One  half $150,000,000.00  Gold  Mortgage  Bonds; 

Preferred  Stock,  6%.  .  .  .75,000,000.00 
Common  Stock, 75,000,000.00 

All  the  Bonds  and  Preferred  Stock  will  be  taken  payment 
by  the  four  outgoing  Partners. 

Part  of  the  Common  Stock  will  be  held  by  the  present 
younger  Partners ;  part  is  now  offered  to  the  public. 

Applications   from   Pittsburg  and  Western   Pennsylvania, 


304  THE  ZENITH   OF  PROSPERITY 

especially  in  Manufacturers  of  Iron  and  Steel,  will  be  given 
preference,  the  desire  being  to  enlist  as  many  experienced  busi- 
ness men  at  home  as  possible. 

All  the  present  Partners  agree  to  continue  in  the  service 
for  Five  (5)  years.  MM.  Carnegie,  Phipps,  Frick  and  Lauder 
also  agree  to  remain  for  that  period  in  their  present  positions 
as  Consulting  Partners. 

The  Partners  have  agreed  to  make  good  any  deficiency  in 
the  Net  Earnings,  should  such  occur  during  said  five  years,  in 
the  amount  necessary  to  pay  interest  on  Bonds  and  upon  Pre- 
ferred Stock,  and  6%  upon  Common  Stock. 

To  meet  this  liability  there  has  been  deposited  with  .... 

Trust  Company,  $20,000,000.00  of  Bonds, 

contributed  pro  rata  by  the  Partners. 

The  present  earnings  of  the  Companies  exceed  the  sum 
required  for  the  payment  stated  and  leaves  a  satisfactory  sur- 
plus for  contingencies.  Additional  Works  now  in  progress, 
which  the  demand  of  the  ever  growing  business  required,  will 
add  to  the  earnings.  The  property  of  the  new  Company  em- 
braces all  the  property  of  the  two  former  Companies ;  every- 
thing is  included — real  estate,  railroads,  coke  lands  (38,000 
acres  unmined),  mills,  furnaces,  houses,  offices,  water  rights, 
mines,  and  everything  of  every  description. 

The  debts  of  the  Company,  including  all  Mortgage  Bonds, 
etc.,  are  more  than  covered  by  the  quick  assets — the  Stock  of 
Material,  and  the  Bills  Receivable,  and  the  Cash  on  Hand. 

The  Company  starts  with Working  Capital. 

(SIGNATURES) 

This  prospectus  is  true ;  nothing  kept  back. 

These  different  plans  of  consolidation  and  reorganization 
were  still  under  consideration  when,  towards  the  end  of  March, 
overtures  were  made  by  ex-Judge  W.  H.  Moore  of  Chicago  for 
the  purchase  of  the  Carnegie- Frick  properties,  with  the  view  of 
combining  them.  This  time  an  effort  was  made  to  get  a  price 
on  Andrew  Carnegie's  individual  holdings  of  stock  in  the  two 
companies,  carrying  as  they  did  control;  but,  for  the  sake  of 
appearances,  Mr.  Carnegie  refused  to  deal  with  outside  parties, 
and  stipulated  that  the  negotiations  should  be  conducted  in  the 
names  of  his  principal  partners,  Phipps  and  Frick.  Accord- 
ingly these  gentlemen  joined  the  syndicate,  with  the  under- 


THE  MOORE   OPTION  305 

standing  that  Moore  and  his  friends  should  finance  the  entire 
scheme. 

Carnegie  demanded  a  million  dollars  for  a  ninety  days'  op- 
tion on  his  entire  interests  at  a  price  of  $157,950,000;  and  he 
afterwards  raised  this  bonus  to  $1,170,000.  The  increase  was 
met  by  Messrs.  Phipps  and  Frick  each  contributing  $85,000, 
Carnegie  agreeing  to  return  these  sums  to  them  later.  The 
other  members  of  the  steel  and  coke  companies  required  no 
bonus  for  an  option  on  their  shares  except  the  nominal  sum  of 
one  dollar.  These  agreements  were  signed  on  April  24th. 

If  the  sale,  had  been  consummated  it  would  have  been  on 
the  basis  of  $250,000,000  "for  the  entire  ownership  of  first 
party  [Andrew  Carnegie]  and  associate  owners  and  interests  in 
all  the  properties  and  assets  of  The  Carnegie  Steel  Co.  Ltd., 
except  its  holdings  in  the  stock  of  the  H.  C.  Frick  Coke  Co., 
and  allied  interests,  namely :  about  thirty  (30)  per  cent,  of  the 
whole  of  the  said  H.  C.  Frick  Coke  Co.,  in  which  thirty  per 
cent,  in  said  H.  C.  Frick  Coke  Company  interests  the  said 
second  parties  [H.  C.  Frick  and  Henry  Phipps,  Jr.]  may  take 
first  party's  interest  on  the  basis  of  Seventy  millions  of  dollars 
($70,000,000)  for  the  whole  of  the  said  H.  C.  Frick  Coke  Co. 
properties  and  allied  interests."  And  "as  to  the  first  party's 
individual  holdings  of  stock  in  the  H.  C.  Frick  Coke  Co.  and 
allied  interests,  this  shall  be  upon  the  basis  of  Seventy  millions 
of  dollars  for  the  entire  property  and  assets  of  the  H.  C.  Frick 
Coke  Co.  of  which  stock  the  holdings  of  the  said  first  party  is 
about  twenty-five  (25)  per  cent,  of  the  whole." 

To  quote  still  further  from  the  original  option,  "the  first 
party  agrees  to  take  as  part  payment  for  his  interests  as  above 
one  hundred  millions  of  dollars  ($100,000,000)  in  five  per  cent, 
fifty  year,  gold  bonds,  to  be  executed  by  such  individual  cor- 
poration or  limited  partnership  association,  as  may  be  desig- 
nated by  the  second  parties,  or  their  assigns,  which  bonds  shall 
be  secured  by  a  mortgage  upon  all  the  real  estate  of  the  Carne- 
gie Steel  Co.  Ltd.  and  to  be  a  first  lien  thereon,  except  so  far 
20 


3o6  THE  ZEXITH  OF  PROSPERITY 

as  the  same  shall  be  now  encumbered,  and  which  shall  cover  all 
of  the  stocks,  interests  and  securities  covered  by  this  option." 
...  "  The  remainder  of  the  consideration  for  the  sale  of  the 
interests  hereby  optioned  is  to  be  in  cash." 

In  this  way  Carnegie  would  have  been  so  secured  that  he 
would  virtually  have  had  a  first  mortgage  on  all  the  partnership 
assets,  thus  gaining  a  preference  over  all  his  partners. 

An  instrument  of  a  like  tenor  and  purport  was  signed  by 
other  members  of  the  Carnegie- Frick  companies,  without  any 
forfeitable  bonus. 

At  the  time  this  option  was  bought  the  money  market  was 
in  such  condition  that  no  difficulty  was  anticipated  by  Judge 
Moore  in  raising  the  necessary  funds  to  carry  out  his  plans, 
huge  as  these  were.  He  represented  that  he  would  have  the 
co-operation  of  the  National  City  and  the  First  National  Banks 
of  New  York.  The  death  of  Roswell  P.  Flower,  however,  and 
the  forced  liquidation  of  the  many  industrial  securities  that  he 
had  been  supporting,  brought  on  a  panic  that  was  as  disastrous 
as  it  was  unexpected.  Occupied  in  protecting  existing  obliga- 
tions, bankers  and  capitalists  had  little  disposition  to  engage 
in  fresh  ventures;  and  realizing  the  impossibility  of  safely 
launching  a  great  enterprise  in  such  troubled  waters,  Messrs. 
Frick  and  Phipps  went  to  Scotland  to  try  to  get  an  extension  of 
their  option.  At  Skibo  Castle  Mr.  Carnegie  refused  to  extend 
the  option,  and  the  negotiations  came  to  an  abrupt  end. 

An  interesting  document  was  drawn  up  at  this  time  which 
is  worth  including  here,  presenting  as  it  does  at  a  glance  the 
imposing  magnitude  of  the  business  whose  growth  we  have 
traced  from  the  little  Kloman  forge  in  the  basement  at  Girty's 
Run.  It  is  the  draft  of  a  prospectus  prepared  by  the  Moore 
Syndicate,  but  never  published.  It  marks  the  zenith  of  the 
Carnegie  Steel  Company's  prosperity.  Supplementing  it  is  a 
letter  from  Mr.  C.  M.  Schwab,  of  considerable  interest. 


THE  MOORE  PROSPECTUS  307 


(PROSPECTUS) 

A  limited  amount  of  the  stock  of  the  "CARNEGIE 
STEEL  COMPANY"  is  now  offered  to  the  public,  on  the 
following  basis : 

The  corporation  which  it  is  planned  to  form  with  the  name 
"  Carnegie  Steel  Company,"  will  have,  through  a  charter  to  be 
obtained  under  the  laws  of  Pennsylvania,  appropriate  powers  for 
acquiring,  producing,  manufacturing  and  dealing  in  steel,  iron, 
ore,  coal  and  coke,  and  all  things  made  of  steel  or  iron,  with  all 
other  powers  deemed  convenient,  and  will  have  an  authorized 
capital  of  two  hundred  and  fifty  million  dollars  ($250,000,000), 
di vided  into  two  million  five  hundred  thousand  (2,500,000) 
shares  of  the  par  value  of  one  hundred  dollars  ($100)  each. 

Each  subscriber  will  agree  to  take  and  pay  for  the  number 
of  shares  for  which  he  may  subscribe,  or  such  smaller  propor- 
tionate number  as  may  be  allotted  to  him  in  the  event  of  over- 
subscription, of  the  full-paid  stock. 

The  price  is  to  be  one  hundred  dollars  ($100)  in  cash  for 
each  share  of  stock,  and  is  to  be  paid  into  such  depository  as 
may  be  designated  by  the  Managers  in  control  of  the  subscrip- 
tion lists,  within  ten  days  after  notice  calling  for  such  payment 
shall  be  delivered  or  mailed  to  the  subscriber;  but  ten  dollars 
out  of  every  one  hundred  dollars  of  subscription  may  be  made 
payable  immediately  on  allotment,  if  so  stated  in  the  notice 
thereof.  If  the  stock  certificates  cannot  be  delivered  when 
payments  are  completed,  receipts  will  be  issued  calling  for  the 
stock  when  ready. 

The  corporation  is  to  be  vested  with  fifteen  million  dollars 
($15,000,000)  in  cash  and  also  with  the  cash  and  other  avail- 
able assets  of  The  Carnegie  Steel  Company,  Limited,  and  the 
H.  C.  Frick  Coke  Company,  and,  subject  to  a  Bonded  Debt  of 
one  hundred  million  dollars  ($100,000,000)  in  50  year  5$  Gold 
Bonds,  with  the  properties  of  The  Carnegie  Steel  Company, 
Limited,  and  the  H.  C.  Frick  Coke  Company,  which  include 
the  following: 

The  Edgar  Thomson  Works,  at  Bessemer,  Pa.,  including: 
Edgar  Thomson  Blast  Furnaces, 
Edgar  Thomson  Foundry, 
Edgar  Thomson  Steel  Works. 

The  Duquesne  \Vorks,  at  Duquesne,  Pa.,  including: 
Duquesne  Blast  Furnace, 
Duquesne  Steel  Works. 


3o8  THE  ZENITH  OF  PROSPERITY 

The  Homestead  Steel  Works,  at  Munhall,  Pa.,  including: 
Bessemer  Steel  Department, 
Open  Hearth  Steel  Department, 
Finishing  Mills, 
Armor  Plate  Department. 
The  Carrie  Blast  Furnaces,  at  Rankin,  Pa. 
The  Lucy  Blast  Furnaces,  in  Pittsburg,  Pa. 
The  Keystone  Bridge  Works,  in  Pittsburg,  Pa. 
The  Upper  Union  Mills,  in  Pittsburg,  Pa. 
The  Lower  Union  Mills,  in  Pittsburg,  Pa. 
The  H.  C.  Frick  Coke  Company's  Coal  and  Coke  properties 
in  Westmoreland  and  Fayette  Counties,  Pa.,  including: 
About  40,000  acres  of  unmined  coal, 
20,000  acres  of  surface  lands, 
1 1 ,000  coke  ovens ; 
2,500  railroad  cars, 
3,500  dwellings. 

The  Larimer  Coke  Works,  at  Larimer,  Pa. 
The  Youghiogheny  Coke  Works,  at  Douglas,  Pa. 
All  the  capital  stock  of  the  following  Companies : 
The  Union  Railroad  Company, 
The  Slackwater  Railroad  Company, 
The  Youghiogheny  Northern  Railway  Company, 
The  Carnegie  Natural  Gas  Company, 
The  Youghiogheny  Water  Company, 
The  Mount  Pleasant  Water  Company, 
The  Trotter  Water  Company, 
The  Pittsburg  and  Conneaut  Dock  Company. 
Over  one-half  the  capital  stock  of  the  Pittsburg,  Bessemer 
and  Lake  Erie  Railroad  Company. 

43.6  per  cent,  of  the  capital  stock  of  the  Pennsylvania  and 
Lake  Erie  Dock  Company. 

One-fourth  of  the  capital  stock  of  the  New  York,  Pennsyl- 
vania and  Ohio  Dock  Company. 

Five-sixths  of  the  capital  stock  of  the  Oliver  Iron  Mining 
Company,  owning : 

All  the  stock  of  the  Metropolitan  Iron  and  Land  Company, 

All  the  stock  of  the  Pioneer  Iron  Company, 

Over  68  per  cent,  of  the  stock  of  the  Lake  Superior  Iron 

Company, 
Over  98  per  cent,  of  the  stock  of  the  Security  Land  and 

Exploration  Company, 

Other  ore  properties  in  negotiation  which  will  be  included 
if  acquired. 


AN  IMPRESSIVE  DOCUMENT  309 

One-half  of  the  capital  stock  of  the  Pewabic  Company. 

Three-fourths  of  the  capital  stock  of  the  Pittsburg  Lime- 
stone Company,  Limited. 

Other  interests  in  Ore  Mines,  Transportation  Companies, 
Dock  Companies,  Valuable  Patents,  and  Companies  owning 
Patents,  etc. 

These  Furnaces,  Steel  Works,  Coke  Works,  and  other  prop- 
erties are  in  full  operation,  their  latest  complete  months'  prod- 
ucts being  as  follows : 

BLAST    FURNACES. 

PRODUCT — GROSS  TONS. 

Names.                                                 Stacks.  Mar.,  1899.  Apr.,  1899. 

Edgar  Thomson  Furnaces 9  90,585  88,937 

Duquesne  Furnaces 4  70,261  63,012 

Carrie  Furnaces 2  18,935  I9,447 

Lucy  Furnaces *. 2  6,031  9, 100 


Total 17  185,812  180,496 

STEEL   WORKS. 

PRODUCT — GROSS  TONS. 

Names.  Mar.,  1899.  Apr.,  1899. 

Bessemer  Steel — 

Edgar  Thomson  Steel  Works 66,427 

Duquesne  Steel  Works 53,189 

Homestead  Steel  Works 31,282 


Total 150,898 

Open  Hearth  Steel— 
Homestead  Steel  Works 90,088 


Total  Steel  Ingots 240,986  212,163     . 

ROLLING   MILLS. 

PRODUCT — GROSS  TONS. 

Names.                                             Kind.                     Mar.,  1899.  Apr.,  1899. 

Edgar  Thomson  Steel  Works. .  Rails I79>256  159,344 

Duquesne  Steel  Works Billets 29,315  29,223 

do                 Sheet  Bars 14,556  n,478 

do                 Splice  Bars 4,207  3,409 

Homestead  Steel  Works Blooms  and  Billets.      95,635  82,977 

do                   Structural 22,043  22,179 

do                  Plates 8,651  8,818 

Upper  Union  Mills Structural 12,106  11,028 

do                Plates 8,455  7,466 

Lower  Union  Mills Structural 4,374  3,947 

do                          Plates 3,543  3,429 


3io  THE  ZENITH  OF  PROSPERITY 


COKE  WORKS. 

SHIPMENTS — NET  TONS. 

Names.                                                                  Mar.,  1899.  Apr.,  1899. 

H.  C.  Frick  Coke  Company 506,870  477,640 

Larimer  Coke  Works 5,030  5,090 

Youghiogheny  Coke  Works 2,860  1,850 

Total  Coke 5*4, 760  484,580 

OTHER   DEPARTMENTS. 

PRODUCT — GROSS  TONS. 

Kind.                       Mar.,  1899.  Apr.,  1899. 

Edgar  Thomson  Foundry Castings 5,465  5,439 

Duquesne  Steel  Works Finished  Splices 4.H4  3,47o 

Homestead  Steel  Works Armor 446  621 

do                    Rivets  and  Bolts 125  105 

do                    Castings 152  200 

do                    Fitted  Work 1,958  1,928 

do                    Columns 635  41 1 

Upper  Union  Mills Rivets  and  Bolts 21  20 

do                Fitted  Work 346  713 

Lower  Union  Mills Axles 2,629  1,664 

do               Forgings 108  103 

do               Spring  Steel 638  731 

Keystone  Bridge  Works Bridge  Work. 3,394  2,933 

do                   Castings 274  348 

do                  Rivets 116  143 

As  has  been  the  fixed  policy  of  the  "  Carnegie  "  Associa- 
tions during  the  past  twenty  years,  Improvements,  Extensions 
and  Additions  are  constantly  being  made.  Blowing  Engines 
are  being  added  at  Edgar  Thomson,  Duquesne  and  Carrie  Blast 
Furnaces,  which  will  increase  the  product  of  Pig  Iron  175,000 
tons  per  annum.  Ten  Open  Hearth  Furnaces,  a  30  inch  Slab- 
bing Mill,  a  128  inch  Plate  Mill  and  a  42  inch  Universal  Plate 
Mill  are  building  at  Homestead  Steel  Works,  and  will  be  com- 
pleted in  June  and  July  next,  increasing  the  product  of  Steel 
Ingots  350,000  tons  per  annum,  and  of  Plates  300,000  tons  per 
annum.  A  Steel  Axle  Works,  at  Howard,  near  the  Homestead 
Steel  Works,  will  be  completed  by  November  next,  with  a 
capacity  of  100,000  tons  of  Car  Axles  per  annum.  Many  other 
minor  Improvements  are  under  way,  all  with  a  view  to  increas- 
ing product,  decreasing  cost  or  expediting  shipment. 

The  present  output  of  these  Works  is  at  the  annual  rate  of 
2,200,000  gross  tons  of  Pig  Iron,  Spiegeleisen  and  Ferro-man- 


POSSIBLE  PROFITS  $4325322  A    MONTH    311 

ganese;  and  2,800,000  gross  tons  of  Steel  Ingots,  with  ade- 
quate finishing  capacity. 

The  Improvements  now  approaching  completion  will  increase 
the  output  to  the  annual  rate  of  2,375,000  gross  tons  of  Pig 
Iron,  Spiegeleisen  and  Ferro-manganese ;  and  3,150,000  gross 
tons  of  Steel  Ingots,  with  sufficient  finishing  capacity  to  turn 
this  Steel  into  Rails,  Billets,  Structural  Shapes,  Plates,  Railroad 
Forgings  and  other  Merchantable  forms. 

The  Net  Earnings  of  the  business  which  will  be  transferred 
to  the  "  Carnegie  Steel  Company  "  were 

For  March,  1899 ". $1,652,038.75 

For  April,  1899 1,888,227.72 

Owing  to  the  magnitude  of  the  business,  and  the  immense 
tonnage  of  the  various  products,  it  is  necessary  that  long  time 
contracts  be  made,  far  in  advance  of  the  time  of  delivery.  The 
result  is  that  present  shipments  are  at  prices  far  below  present 
rates,  the  rates  at  which  contracts  are  being  made  for  future 
delivery.  Had  current  prices  been  obtained  for  the  shipments 
during  these  two  months,  the  Net  Earnings  would  have  been 

For  March,  1899. $3,182,574.95 

For  April,  1899 4,325,922.78 

and  with  present  market  prices  and  the  increased  product  result- 
ing from  the  Improvements  named,  an  average  single  month's 
Net  Profit  will  largely  exceed  the  above;  justifying  the  expec- 
tation that  the  "  Carnegie  Steel  Company  "  will  pay  annually, 
under  almost  any  condition  of  business : 

5$  on  $100,000,000  Bonds $5,000,000.00 

And  at  least 

6%  on  $250,000,000  Stock 15,000,000.00 


$20,000,000.00 

and  leave  an  ample  surplus  for  extra  Dividends,  as  well  as  for 
other  Improvements  and  Additions  which  will  still  further  in- 
crease the  Net  Earnings  and  the  rate  of  Dividends  on  the  Stock, 
besides  providing  a  fund  for  retiring  the  Bonds  at  maturity. 
The  Carnegie  Steel  Company  has  been,  is,  and  will  be  in  an 
absolutely  independent  position,  owning  the  sources  of  supply : 
Ore,  Coal,  Coke,  Limestone  and  Natural  Gas ;  the  Transporta- 


3i2      THE  ZENITH  OF  PROSPERITY 

tion  Lines  for  bringing  the  raw  materials  to  the  Works ;  the 
Docks  for  handling  Ore;  the  Coke  Works,  Blast  Furnaces, 
Steel  Works  and  Finishing  Mills,  each  advancing  the  product 
to  a  higher  grade,  until  it  is  ready  for  the  markets  of  the  World, 
with  every  intermediate  profit  saved  for  the  benefit  of  its  Stock- 
holders. 

The  efficient  Organization  which  had  brought  the  "  Carne- 
gie "  Associations  to  their  present  unassailable  position  will 
remain  intact.  Nearly  all  of  the  former  Shareholders  in  The 
Carnegie  Steel  Company,  Limited,  and  the  H.  C.  Frick  Coke 
Company,  all  of  whom  were  actively  engaged  in  the  business, 
have  taken  Stock  in  the  "  Carnegie  Steel  Company,"  and  many 
other  Offkers  and  Employes,  Superintendents,  Foremen,  Heads 
of  Departments,  Sales  Agents,  Workmen  and  Clerks,  have  sub- 
scribed for  Stock  in  the  new  Company,  demonstrating  their 
faith  in  its  future  and  ensuring  the  same  bold  yet  conservative 
management  which  has  rendered  possible  such  an  aggregation 
of  capital  as  this ;  making  large  profits,  yet  earning  them ;  con- 
trolling the  market,  yet  never  abusing  its  power;  encouraging 
the  wider  use  of  Steel  by  the  reductions  made  in  its  Cost,  yet 
paying  the  highest  wages  in  the  World.  Such  has  been  the 
past,  such  is  the  present  and  such  will  be  the  future  of  the  Car- 
negie Steel  Company. 

PITTSBURG,  PA.,  May  i5th,  1899. 
MY  DEAR  MR.  FRICK: 

You  ask  me  to  give  my  views  as  to  the  probable  future 
earnings  of  the  Carnegie  Interests,  and  as  to  the  proposed  reor- 
ganization on  a  basis  of  $100,000,000  Bonds — $250,000,000 
preferred  stock  and  $275,000,000  common  stock. 

Permit  me  to  say  that  commencing  in  1879  as  Engineer, 
constructing  the  works,  ten  years  as  General  Superintendent  of 
our  principal  works  and  over  two  years  as  President,  I  feel  that 
I  know  the  properties  and  their  possibilities  as  well,  or  better 
than  any  one  in  or  out  of  the  concern. 

While  we  have  been  highly  successful  in  the  past,  as  every 
one  knows,  I  believe  we  are  only  now  getting  in  shape  to  be 
truly  successful  and  truly  profitable.  Our  April  profit  and  loss 
sheet  shows  earnings  slightly  over  $1,500,000.00  with  rails 
netting  us  only  $17.50  and  billets  $16.00.  Lowest  prices  we 
ever  had  on  an  average  were  $16.50  for  rails  and  $14.  50  for 
billets,  so  you  see  we  have  reaped  very  little  of  the  advantages 
of  increased  prices.  With  prices  anywhere  near  to-day's  sell- 
ing prices  we  would  easily  make  over  $3, 000,000.00  per  month, 


THE  LAST  BALANCE    SHEET 


313 


TUB  CARMEOIE  STEEL  COMPACT.  LISITZD. 

Office  of  Secretory. 
BALAHOE  SHEET,  UAROB  1,  1900. 


ASSETS* 
CASHj-  Treasury, 

Work*, 

Sale*  Agenaie*. 
BILLS  RECEIYA3LB, 
hORTGAOES  RECEIVABLE!  Employ**, 
ACCOUNTS  RECEIVABLE!  Current, 
Securiti« 

STOCKSi  Finiahed  Product, 
Material*  for  Uae, 
Or*  at  Lake  Porta, 
Ore  at  Mine*, 

AVAILABLE  ASSETS, 
WRKS  and  PROPERTIES t- 
Edgar  Thonaoa  Vtorks, 
Duquecne  Steel  Worka, 
Duquetme  Furna***, 
Honostoad  Steel  Worka, 
Carrie  Furnace*, 
Howard  Axle  Work*, 
Luoy  Furnace* t 
Keyaton*  Bridge  Work** 
Upper  Union  Mills, 
Lower  Union  ililla, 
Larimer  Coke  Work*, 
Youghioghsny  Coke  Worto* 
City  Para  Lota, 
Yerona  Land, 
Liberty  Pam, 
Oliver  Land, 
Pawdott  Land, 
1300  E,iraOVE!Ot3»- 
Ixigor -Thoftaon  Parbaoee, 
Ed^r  Tboaaan  Steel  Wka.  • 
Edgar  fhocwan  Foundry, 
Daqunen*  Pumaces, 
Duquoone  steel  Wbrfc*. 
Honeatead  Steel  Wbrka, 
Carrie  Furnaces, 
Howard  Axle  Works, 
Luoy  Furnace*, 
Keystone  Bridge  V.'ork*, 
Upper  Union  Milla, 
Lower  Union  Mill*, 
STOCKS  &  BONDS.  Inrertoent*, 
UNDIVIDED  CAPITAL, 
DUE  FROM  PARTMER3, 

TOTAL  ASSETS, 
LIABILITIES. 
JSORTQAGES  PAYABLEi- 
Edgar  Tboiason  7,'orkB, 
Duqueane  Steel  Worke, 
Duquoane  Fornaoos, 
Itoneotead  Steel  Worka, 
Carrie  Furnaces, 
Howard  Axle  Work*, 
Keystone  Bridge  Work*, 
Liberty  yarn, 
Oliver  Land, 
BILLS  PAYABLSt  Current, 
Stewart, 
Borntraeger, 
AOCOUUT3  PAYABLE!  Current, 

Or*; 
SPECIAL  DEPOSITS, 

LIABILITIES  PATABLE, 
SPECIAL  FUKDSl- 
Oontingent  Fund, 
Contingent     *  Special, 
Relining  Fond, 
Coal  ExtinguiBhnent  Fund, 
DOE  TO  FARTHERS, 
SURPLUS, 
CAPITAL, 


10,429,594.«T 

2,333,406.35 

5,626,211.91 

-16,644,201.34 

1.079.388.69 

TIT, 478. 87 

1,251,869.99 

713,180.11 

1,000,000.00 

700,000.00 

200,000.00 

160,000.00 

960,664.50 

40,000.00 

225,000 .dO 

310,313.81 

25.00 


209,945.00 
995,000.00 
200,000.00 
103,250.00 
600,000.00 
275,275.85 
50,000.00 
150,000.00 


4,560,174.1 
375,000.00 
27V423.  56 

2,4»9,650.44 

240.150.21 


557,143.50 
711,310.00 
211,328.85 
15.822.45 

£6,579,914.19 

25,000,000.00 


l,287,48t.M 
19,285.48 

2i.302.SQ.  1,352,023,59 

7,174,804.02 

239,848.44 


16,381,834.06 


16,899,208.80 


7,087,9«4.76 

1,952,212.91 

16.470.00 


42, 396,513.74 


988,797.31 
14. 940. * 


8.566.642.2 


58,295.716.59 

5.663.352.94, 
101,416,802.43 


2,734,470.8* 


5,004,698.29 
2,709,780.68 


1.496 ,104. 30 
«, 113, 657. 38 

81,579.914.19         101. 416.802. 43 


Photographic  copy  of  last  balance  sb«et  before  consolidation. 


314  THE  ZENITH  OF  PROSPERITY 

and  then  our  new  works  to  be  started  in  two  months  will,  I 
estimate  on  present  prices,  bring  us  an  additional  profit  of 
$600,000.00  per  month  or  total  of  $3,600,000.00  per  month. 

As  to  the  future  even  on  low  prices,  I  am  most  sanguine. 
I  know  positively  that  England  cannot  produce  pig  iron  at 
actual  cost  for  less  than  $i  i.  50  per  ton,  even  allowing  no  profit 
on  raw  materials,  and  cannot  put  pig  iron  into  a  rail  with  their 
most  efficient  works  for  less  than  $7.50  per  ton.  This  would 
make  rails  at  net  cost  to  them  of  $19.00.  We  can  sell  at  this 
price  and  ship  abroad  so  as  to  net  us  $16.00  at  works  for  for- 
eign business,  nearly  as  good  as  home  business  has  been. 
What  is  true  of  rails  is  equally  true  of  other  .steel  products. 
As  a  result  of  this  we  are  going  to  control  the  steel  business 
of  the  world. 

You  know  we  can  make  rails  for  less  than  $12.00  per  ton, 
leaving  a  nice  margin  on  foreign  business.  Besides  this,  for- 
eign costs  are  going  to  increase  year  by  year  because  they  have 
not  the  raw  materials,  while  ours  is  going  to  decrease.  The 
result  of  all  this  is  that  we  will  be  able  to  sell  our  surplus 
abroad,  run  our  works  full  all  the  time  and  get  the  best  practice 
and  costs  in  this  way. 

As  to  the  works,  any  competitor  will  tell  you  that  we  are 
far  ahead  of  any  one,  and,  if  the  plans  which  we  have  for  the 
future,  are  carried  out  we  will  be  farther  ahead  than  ever.  I 
have  no  fears  for  the  earnings  in  the  future.  I  believe  they 
will  much  exceed  any  estimate  we  have  made,  provided,  how- 
ever, that  the  same  methods  of  organization  and  operation  as 
now  exist,  are  fully  carried  out  in  the  future. 

It  must  not  be  run  as  other  concerns  are  run,  but  as  it  is 
now  conducted.  This  is  most  important.  I  believe  the  earn- 
ings will  fully  justify  the  capitalization  and  as  a  proof  of  my 
belief  in  this,  I  am  quite  willing  to  take  every  dollar  I  own  in 
the  stock  of  the  new  concern  on  the  basis  proposed. 
Very  truly  yours, 

C.   M.    SCHWAB, 

President. 

MR.  H.   C.  FRICK,  Chairman, 
Building. 

The  third  attempt  to  sell  the  Carnegie  properties  to  the 
public  having  thus  failed,  the  partners  returned  to  their 
schemes  of  consolidation  and  reorganization.  This  time  Mr. 
Frick  and  the  junior  members  took  up  the  task;  and  they  made 


ANOTHER    SCHEME  FAILS  315 

elaborate  plans 'for  a  new  company  with  a  capital  of  $250,000,- 
ooo  and  no  bonds.  This  company  was  "  to  purchase  from  the 
Carnegie  Steel  Co.,  Ltd.,  for  $195,312,500  all  its  properties 
real,  personal  and  mixed,  excepting  its  holdings  in  the  stocks 
of  the  H.  C.  Frick  Coke  Co. "...  and  "  from  the  H.  C.  Frick 
Coke  Co.  and  its  subsidiary  companies  named  above,  for  $54,- 
687,500  all  their  properties,  real,  personal  and  mixed;  the  total 
consideration,  $250,000,000,  to  be  paid  in  instalments  as  the 
stock  subscriptions  became  due."  Provision  was  made  for 
"Andrew  Carnegie  to  loan  to  each  '  Debtor  Partner  '  an  amount 
sufficient  to  enable  him  to  pay  his  indebtedness  to  either  sell- 
ing company."  "All  the  stock"  was  to  be  "placed  in  a  trust 
for  ten  years,  during  which  time  no  stock  shall  be  sold  except- 
ing "  from  one  owner  to  another,  or  by  authorization  of  a  three- 
fourths  vote  of  stock  in  value  and  stockholders  in  number,  or 
in  the  event  of  death  of  any  member.  This  plan,  representing 
the  "  unanimous  views  of  every  subscriber  hereto,  after  full  dis- 
cussions of  all  suggestions  had  at  meetings  held  September 
n,  19,  and  25,"  was  commended  to  "the  favorable  considera- 
tion of  the  senior  members."  "We  would  not  favor  any  plan 
that  would  contemplate  bonding  the  property,"  they  concluded. 
Ten  signatures  followed. 

Of  course  nothing  came  of  it.  It  is  surprising  that  any- 
thing should  have  been  expected  of  a  plan  that  did  not  "  con- 
template bonding  the  property."  Andrew  Carnegie  had  placed 
himself  on  record  with  sufficient  emphasis  to  leave  no  doubt  in 
any  reasonable  mind  as  to  the  kind  of  security  he  wanted.  So 
this  plan  joined  the  other  liquid  ideas  that  the  corporate  mind 
had  secreted  during  the  preceding  years. 


CHAPTER    XX 
CARNEGIE'S    ATTEMPT   TO    DEPOSE    FRICK 

IN  chemical  experiments  it  often  happens 
that  before  the  process  of  crystallization 
can  be  started  in  a  saturated  solution, 
a  blow  must  be  given  to  the  vessel 
containing  it.  This  was  evidently 
the  condition  of  the  ideas  that  had 
long  been  floating  in  and  out  of 
the  minds  of  the  partners  concern- 
ing consolidation  and  reorganization :  it  required  the  shock  of  a 
rupture  between  Carnegie  and  Frick  to  jar  the  fluid  schemes 
into  solidity.  And  in  conformity  with  the  run  of  forty  years' 
uninterrupted  Carnegie  luck,  this  shock,  which  threatened  at 
first  to  have  a  shattering  effect,  further  welded  the  corporate 
interests,  doubled  the  already  enormous  wealth  of  the  principal 
partners,  and  made  the  little  ones  all  millionaires. 

It  was  not  inconsistent  with  its  previous  history  that  the 
Carnegie  enterprise  should  reach  its  final  and  perfected  form 
through  strife.  Born  of  a  quarrel,  it  throve  on  contention. 
Each  stage  of  its  growth  was  marked  by  some  dispute;  and 
that  it  ever  became  a  Carnegie  concern,  rather  than  a  Miller, 
Coleman,  or  a  Shinn  creation,  was  solely  due  to  the  consolidat- 
ing effect  of  timely  "ejectures,"  as  Carnegie  euphemistically 
named  the  expulsion  of  partners. 

The  proposed  "ejecture"  of  Frick,  however,  was  not  the 
simple  matter  it  had  been  in  previous  cases.  The  man  whose 
stubborn  nature  had  passed  through  the  annealing  process  a 
dozen  times  was  not  the  one  to  accept  an  arbitrary  dismissal ; 
and  the  fight  he  now  made  was  as  notable,  and  was  as  keenly 

316 


INTOLERANCE   OF  RIVALS  317 

watched  by  the  country,  as  was  the  contest  with  labor  that 
had  given  him  the  real  headship  of  the  great  organization  he 
managed. 

In  tracing  the  causes  of  this  attempted  "ejecture,"  the  one 
just  named  was  probably  the  first.  Since  the  earliest  days  it 
had  been  the  basis  of  Andrew  Carnegie's  policy  to  tolerate  no 
rival.  In  every  previous  case  the  growing  prominence  of  part- 
ners had  been  checked  before  it  had  become  dangerous.  The 
genius  of  Kloman,  the  strong  personality  of  Coleman,  the  mas- 
terful competency  of  Shinn,  each  in  turn  was  forced  to  yield  to 
the  superior  money  power  of  Carnegie,  and  to  find,  as  one  of 
the  old  partners  graphically  puts  it,  "  a  top  fence-rail  of  its  own 
to  crow  from."  Phipps,  willing  to  stand  in  the  shadow  and  in- 
different even  to  the  honors  that  were  peculiarly  his,  inspired 
neither  jealousy  nor  fear.  Lauder  was  only  Carnegie's  echo. 
Singer  conscientiously  attended  the  Board  meetings,  and  his 
ambition  was  more  than  satisfied  with  the  prerogative  of  mak- 
ing the  motion  for  dividends.  Stewart  was  a  good-natured  and 
most  useful  treasurer,  who  could  always  get  money  on  a  pinch. 
Abbot,  publicly  greeted  by  Carnegie  as  "  that  young  Napoleon 
of  business  "  one  day,  was  exiled  almost  the  next.  The  busi- 
ness genius  of  T.  M.  Carnegie  might  have  made  him  dangerous, 
but  he  died  young.  Of  them  all  Frick,  young,  forceful,  self- 
contained,  tenacious,  ambitious,  and  rich,  was  more  than  a  rival ; 
he  was  an  equal  from  the  start.  And  when  he  emerged  from 
the  Homestead  contest  with  the  admiration  of  the  country, 
while  Carnegie  had  only  mystified  the  people,  his  leadership 
was  everywhere  acknowledged. 

The  first  effort  to  diminish  Prick's  prominence  was  made 
in  1895.  At  this  time  he  was  trying  to  unify  the  coke- produc- 
ing interests  in  one  great  company.  He  had  almost  succeeded ; 
but  there  remained  one  third-rate  operator  who  refused  to  join 
the  combination  on  any  reasonable  terms.  The  character  of 
this  person  was  such  that  he  was  hardly  tolerated  amongst  hon- 
est men,  except  when  they  met  him  at  church ;  and  Frick  had 


318  ATTEMPT   TO  DEPOSE  FRICK 

ceased  to  seek  his  co-operation.  Then  Carnegie  secretly  took 
up  the  negotiation,  and  arranged  a  scheme  by  which  this  in- 
dividual, with  his  twelve  hundred  ovens,  should  assume  the 
headship  of  the  coke  combination,  while  Frick  with  his  ten 
thousand  ovens,  should  modestly  drop  into  a  subordinate  place. 
The  project  died  with  apoplectic  suddenness  as  soon  as  it  was 
proposed  to  the  man  most  interested ;  and  Carnegie  acquired  a 
new  view  of  his  partner.  Thereupon  the  office  of  president  of 
the  Carnegie  Steel  Company  was  created,  and  Mr.  Leishman 
was  put  in  with  that  title,  Mr.  Frick  remaining  chairman  as 
before. 

To  the  outside  world  it  looked  as  if  Mr,  Frick  had  been 
deposed  from  his  headship  by  this  proceeding ;  but  every  clerk 
in  the  office  and  every  man  in  the  mills  knew  that  this  was  not 
so.  The  power  that  ruled  every  department,  from  the  highest 
to  the  lowest,  was  Frick ;  and  the  president  had  merely  such 
outside  prestige  as  the  chairman  did  not  value. 

The  cause  of  disagreement  between  Carnegie  and  Frick  that 
had  most  influence  in  producing  the  final  rupture  was  the 
divergent  views  they  held  concerning  the  price  the  steel  com- 
pany should  pay  for  coke.  While  Carnegie  controlled  a  major- 
ity of  the  coke  company's  stock,  through  his  personal  holdings 
and  those  of  the  firm,  there  were  a  few  outside  shareholders 
whose  interest  it  was  that  the  steel  company  should  pay  the  full 
market  price  for  its  fuel ;  and  to  protect  these  minority  stock- 
holders, Frick  always  made  as  good  a  contract  as  he  could  with 
the  steel  company.  Carnegie,  on  the  other  hand,  wishful  to 
keep  all  costs  down,  tried  to  obtain  specially  low  rates  on  coke 
for  his  firm.  This  matter  eventually  brought  about  the  final 
rupture. 

Before  this  happened,  however,  another  source  of  ill  feeling 
grew  out  of  the  failure  of  the  Moore  Syndicate  to  complete  the 
purchase  of  Carnegie's  interest  at  a  price  of  $157,950,000. 
For  unfortunately  the  news  of  this  option  had  been  made  pub- 
lic ;  and  the  newspapers  of  England  and  America  overwhelmed 


ABSURD  NOTORIETY 


319 


Carnegie  with  their  comments  and  congratulations,  just  as 
though  the  huge  transaction  had  been  completed.  When, 
through  the  collapse  of  the  money  market,  the  syndicate  found 
itself  unable  to  finance  a  deal  calling  for  a  hundred  millions  in 
cash  in  ninety  days,  Mr.  Carnegie's  chagrin  was  all  the  greater 
because  of  the  premature  applause  to  which  he  had  been  treated. 
And  his  annoyance  was  very  natural.  With  excessive  zeal  his 
friend  Stead  had  rushed  a  book  through  the  press  entitled  "  Mr. 
Carnegie's  Conundrum :  ,£40,000,- 
ooo.  What  shall  I  do  with  it?" 
and  bearing  on  its  title-page  the 
famous  Carnegie  dictum:  "The 
man  who  dies  rich  dies  dis- 
graced !  "  Under  the  circum-  ".""" 
stances  it  was  an  anticlimax. 
Furthermore,  an  enterprising 
advertiser  of  soap  or  some  such 
detergent  placarded  England, 
where  Carnegie  was  then  stay- 
ing, with  offers  of  prizes  for  the 
best  answer  to  "  Mr.  Carnegie's 
Conundrum  "  ;  and  daily  reports 
were  published  in  the  newspapers 
of  the  thousands  of  answers  re- 
ceived. The  position  in  which  the  millionaire  philanthropist 
was  thus  placed  was  most  undignified.  He  could  not  take  up  a 
paper  without  seeing  in  the  form  of  an  advertisement  some 
idiotic  suggestion  as  to  how  he  ought  to  spend  the  forty  million 
sterling  he  had  failed  to  receive.  He  could  not  take  a  walk 
without  the  same  offensive  advice  gleaming  from  a  hundred 
bill-boards ;  and  supersensitive  as  he  always  was  to  ridicule,  his 
displeasure  not  unnaturally  fell  upon  the  partners  whom  he 
regarded  as  primarily  responsible  for  this  absurd  notoriety.  So 
when  they  came  to  him  for  an  extension  of  their  all-too-short 
option,  he  not  only  refused  it,  but  in  contravention  of  his  agree- 


'  Offensive  advice  gleaming  from 
bill-boards." 


320 


ATTEMPT   TO  DEPOSE  FRICK 


ment  with  them,  kept  the  $170,000  which  they  had  contrib- 
uted as  their  share  of  the  $1,170,000  paid  him  as  a  bonus  for 


Photographic  copy  of  letter  from  Mr.  Carnegie  in  England  to  his  trustees  in  Pitts- 
burg.  In  his  own  hand  are  the  words :  Of  course  any  part  paid  by  my  partners  1 
shall  refund. 

the  option.     Here  is  a  photographic  reproduction  of  a  portion 
of  the  letter  in  which  he  made  this  agreement. 

The  culmination  of  these  animosities  was  reached  in  Octo- 


THE  ALLEGED   COKE   CONTRACT  321 

her,  after  Mr.  Carnegie's  return  from  Europe.  It  came  about  in 
this  wise. 

One  day,  during  the  previous  spring,  Mr.  Phipps  called  on 
Mr.  Carnegie  in  New  York  and  was  greeted  with  great  effusion. 
"  Harry,"  said  Carnegie,  "  Frick  has  just  left;  and  I've  made  a 
splendid  contract  for  coke.  It  is  a  three  years'  agreement  to 
give  us  coke  at  $1.35  a  ton." 

"And  if  the  market  price  drops  below  $1.35  ?  "  queried  Mr. 
Phipps. 

Mr.  Carnegie  was  surprised.  He  had  not  thought  of  that. 
A  day  or  two  later,  when  Mr.  Phipps  called  again,  he  said : 

"Harry,  I've  fixed  that  coke  matter.  We  are  to  have  the 
same  price  as  others  if  it  drops  below  $1.35." 

I.t  afterwards  turned  out  that  the  way  he  had  "  fixed  "  it  wat 
that  he  had  told  Lauder  to  notify  Schwab  that  a  clause  must  be 
added  to  the  contract,  under  which  the  Carnegie  Steel  Company 
would  pay  the  same  price  for  coke  as  any  other  buyer,  provided 
that  price  was  less  than  $1.35. 

"  Is  that  what  Mr.  Carnegie  demands  ?  "  asked  Mr.  Frick, 
on  receiving  the  message  through  Mr.  Schwab. 

"  It  is,"  replied  the  latter. 

"Then  the  arrangement  is  all  off,  and  must  betaken  up 
anew." 

This  answer  was  communicated  to  Mr.  Carnegie ;  but  he 
did  not  mention  the  matter  to  Mr.  Frick,  although  he  allowed 
others  to  give  him  to  understand  that  he  considered  the  agree- 
ment as  amended  by  himself  binding  on  the  coke  company. 

During  the  early  summer  the  price  of  coke  was  low,  and 
there  was  no  disposition  shown  by  the  Carnegies  to  have  the 
alleged  contract  enforced;  but  when  prices  advanced  an  at- 
tempt was  made  to  settle  with  the  Frick  Company  at  $1.35  a 
ton.  Insisting  that  the  coke  company  had  no  contract  with  the 
steel  company,  President  Lynch  had  all  shipments  billed  at 
market  rates ;  and  when  Mr.  Lawrence  Phipps,  on  behalf  of  the 

steel  company,  refused  to  pay  more  than  $1.35  a  ton,  he  was 
21 


322  ATTEMPT   TO  DEPOSE  FRICK 

notified  that  no  further  orders  would  be  filled  until  payment  for 
past  purchases  was  made  at  the  rates  charged.  To  remove  all 
doubt  as  to  where  the  coke  company  stood,  a  meeting  of  the 
Board  of  Directors  was  held  on  October  25th,  1899,  and  the  fol- 
lowing resolution  was  passed : 

"  Resolved,  That  the  president  be  authorized  and  instructed 
to  notify  the  Carnegie  Steel  Company,  Limited,  that  the  exist- 
ence of  any  contract  is  denied  and  that  no  claim  to  settle  in 
accordance  with  the  terms  of  the  alleged  contract  for  past,  pres- 
ent or  future  deliveries  of  coke  to  the  said  Carnegie  Steel  Com- 
pany, Limited,  will  be  recognized  or  entertained  by  this  Com- 
pany." 

It  was  at  this  critical  juncture  that  a  disagreement  of  a  more 
personal  nature  occurred  between  Messrs.  Frick  and  Carnegie, 
and  brought  down  the  tottering  fabric  of  their  friendship  with 

a  crash  that  wrought  the  final  trans- 
formation of  the  Carnegie  Steel 
Company,  alienated  lifelong  friends, 
gave  the  public  the  secret  confi- 
dences of  the  corporation,  and  Pitts- 
burg  a  new  batch  of  millionaires. 
It  seemed  a  little  thing  to  produce 
such  momentous  changes;  but  then, 
it  was  only  Mrs.  O'Leary's  cow  that  set  the  city 

At  the  meeting  of  the  Board  of  Managers 
on  December  nth,  1899,  Mr.  Schwab  made  reference  to  the  con- 
templated purchase  by  the  Carnegie  Company  of  a  tract  of  land 
situated  on  the  Monongahela  River  belonging  to  Mr.  Frick;  and 
he  mentioned  " a  hitch  in  the  negotiations."  This  tract  had 
been'acquired  by  Mr.  Frick  in  partial  exchange  of  other  land ;  and 
Mr.  Lawrence  Phipps,  who  was  familiar  with  land  values  in  that 
neighborhood,  had  valued  it  at  $4,000  an  acre.  The  land  was 
wanted  by  the  company;  and  Mr.  Frick  offered  it  to  the  firm  at 
$3,500.  As  Mr.  Schwab  remarked  at  the  meeting,  "there  is 


AN  INSINUATION  MET  323 

no  doubt  about  our  needing  this  land  before  long " ;  and  Mr. 
Frick  had  shown  his  habitual  foresight  in  securing  it.  For 
some  reason,  however,  Mr.  Carnegie  disapproved  of  the  pur- 
chase after  he  had  sanctioned  it;  and  insinuated  that  Mr.  Frick 
was  making  a  profit  on  the  transaction.  This  coming  to  Mr. 
Frick's  ears,  he  withdrew  his  offer.  This  was  the  "hitch"  to 
which  Mr.  Schwab  referred.  Later  fresh  troubles  arose ;  and 
Mr.  Frick  sold  the  land  to  other  parties  for  half  a  million  dol- 
lars more  than  he  had  asked  the  Carnegie  Steel  Company. 

The  insinuation,  with  its  implications,  was  indignantly  re- 
sented by  Mr.  Frick.  He  did  not  meet  the  covert  attack  by  a 
return  innuendo,  but  by  an  open  minute  spread  upon  the  rec- 
ords of  the  Carnegie  Steel  Company.  This,  dated  November 
2Oth,  was  as  follows : 


In  submitting  Mr.  Moreland's  report,  I  would  like  to  call 
attention  especially  to  low  prices  we  are  to  receive  for  rails 
through  the  greater  part  of  next  year — almost  $8.00  per  ton 
below  the  present  market  price,  and  very  little  above  what  old 
rails  for  re-melting  are  selling  for.  This  will  seriously  affect 
our  labor  at  Edgar  Thomson,  which  is  based  on  the  price  we 
receive  for  rails. 

Mr.  Carnegie  continually  referred,  while  here,  to  the  low 
prices  obtained  under  sliding  scale  contracts,  entirely  ignoring 
the  fact  that  he  alone  was  to  blame  for  creating  the  atmosphere 
in  which  these  sliding  scale  contracts,  and  other  contracts,  were 
made,  by  insisting  last  fall,  against  the  almost  unanimous  pro- 
test of  his  partners,  on  selling  rails  far  into  the  future  at  $16.00 
and  $17.00  per  ton.  It  was  fair  for  Sales  Department  to  as- 
sume that  if  those  were  his  views  as  to  the  prices  which  were 
to  prevail  for  rails,  they  should  be  well  satisfied  with  the  much 
better  prices  they  were  themselves  obtaining  for  other  products 
under  sliding  scale  contracts  they  were  then  making ;  although, 
it  must  be  said  for  Mr.  Carnegie,  that  he  gave  as  his  reason  for 
wanting  such  low  prices  for  rails,  that  it  was  for  the  purpose  of 
breaking  up  eastern  Rail  Companies. 

I  learn  that  Mr.  Carnegie,  while  here,  stated  that  I  showed 
cowardice  in  not  bringing  up  question  of  price  of  coke  as  be- 
tween Steel  and  Coke  Companies.  It  was  not  my  business  to 
bring  that  question  up.  He  is  in  possession  of  the  Minutes 


324  ATTEMPT   TO   DEPOSE   FRICK 

of  the  Board  of  Directors  of  the  Frick  Coke  Company,  giving 
their  views  of  the  attempt,  on  his  part,  to  force  them  to  take 
practically  cost  for  their  coke.  I  will  admit  that,  for  the  sake 
of  harmony,  I  did  personally  agree  to  accept  a  low  price  for 
coke ;  but  on  my  return  from  that  interview  in  New  York 
(within  the  next  day  or  two)  President  Schwab  came  to  me  and 
said  that  Mr.  Lander  said  the  arrangement  should  provide  that, 
in  case  we  sold  coke  below  the  price  that  Mr.  Carnegie  and  I 
had  discussed,  the  Steel  Company  was  to  have  the  benefit  of 
such  lower  price.  I  then  said  to  Mr.  Schwab  to  let  the  matter 
rest  until  Mr.  Carnegie  came  out  (he  told  us  he  intended  to 
come),  and  we  would  take  up  the  question  of  a  coke  contract. 
He  changed  his  plans,  and  did  not  come  out.  I  saw  him  in 
New  York,  before  he  sailed,  and  told  him  that  Mr.  Lauder  had 
raised  that  question,  and  suggested  that  he  write  Mr.  Schwab, 
and  let  Messrs.  Schwab  and  Lynch  take  up  the  question  of  a 
coke  contract.  Mr.  Schwab,  I  believe,  never  heard  from  him 
on  the  subject,  and  Mr.  Lynch,  President  of  the  Frick  Coke 
Company,  very  properly,  has  been  billing  the  coke,  as  there  was 
no  Arrangement  closed,  at  a  price  that  is  certainly  quite  fair  and 
reasonable  as  between  the  two  Companies,  and  at  least  20  cents 
per  ton  below  the  average  price  received  from  their  other  cus- 
tomers. We  have  By-Laws,  and  they  should  govern.  If  not, 
why  do  we  have  them  ?  It  is  the  business  of  the  Presidents  of 
the  two  Companies  to  make  contracts  of  all  kinds.  Mr.  Car- 
negie has  no  authority  to  make  a  contract  that  would  bind  this 
Company.  Neither  have  I  any  authority  to  make  any  contract 
that  would  bind  the  Frick  Coke  Company ;  and,  at  any  rate, 
why  should  he,  whose  interest  is  larger  in  Steel  than  it  is  in 
Coke,  insist  on  fixing  the  price  which  the  Steel  Company 
should  pay  for  their  coke?  The  Frick  Coke  Company  has 
always  been  used  as  a  convenience.  The  records  will  show 
that  its  credit  has  always  been  largely  used  for  the  Steel  Com- 
pany, and  is  to-day,  to  the  extent  of  at  least  $6,000,000.00. 
The  value  of  our  coke  properties,  for  over  a  year,  has  been,  at 
every  opportunity,  depreciated  by  Mr.  Carnegie  and  Mr.  Lau- 
der, and  I  submit  that  it  is  not  unreasonable  that  I  have  con- 
siderable feeling  on  this  subject.  He  also  threatened,  I  am 
told,  while  here,  that,  if  low  price  did  not  prevail,  or  something 
was  not  done,  that  he  would  buy  20,000  acres  of  Washington 
Run  coal  and  build  coke  ovens.  That  is  to  say,  he  threatened, 
if  the  minority  stockholders  would  not  give  their  share  of  the 
coke  to  the  Steel  Company,  at  about  cost,  he  would  attempt  to 
ruin  them. 


THE  FINAL  BREAK  325 

He  also  stated,  I  am  told,  while  here,  that  he  had  purchased 
that  land  from  me  above  Peters  Creek ;  that  he  had  agreed  to 
pay  market  price,  although  he  had  his  doubts  as  to  whether  I 
had  any  right,  while  Chairman  of  the  Board  of  Managers  of  the 
Carnegie  Steel  Company,  to  make  such  a  purchase.  He  knows 
how  I  became  interested  in  that  land,  because  I  told  him  in 
your  presence,  the  other  day.  Why  was  he  not  manly  enough 
to  say  to  my  face  what  he  said  behind  my  back?  He  knew  he 
had  no  right  to  say  what  he  did.  Now,  before  the  Steel  Com- 
pany becomes  the  owner  of  that  land,  he  must  apologize  for  that 
statement.  I  first  became  interested  in  that  land,  as  I  told 
you,  through  trading  a  lot  in  Shady  Side  that  I  had  owned  for 
years.  The  land  is  six  miles  away  from  any  land  owned  by  the 
Carnegie  Steel  Company.  Steel  Company  does  not  need  it 
now,  and  will  not  need  it  for  a  long  time  in  the  future,  if  at 
all;  but,  of  course,  if  they  owned  it,  it  might  keep  another 
large  works  from  being  built,  or  enable  Steel  Company  to  go 
into  competition  with  some  other  large  industry. 

Harmony  is  so  essential  for  the  success  of  any  organization 
that  I  have  stood  a  great  many  insults  from  Mr.  Carnegie  in 
the  past,  but  I  will  submit  to  no  further  insults  in  the  future. 

There  are  many  other  matters  I  might  refer  to,  but  I  have 
no  desire  to  quarrel  with  him,  or  raise  trouble  in  the  organiza- 
tion; but,  in  justice  to  myself,  I  could  not  at  this  time,  say  less 
than  I  have. 

A  copy  of  this  was  sent  in  the  usual  way  to  Mr.  Carnegie 
in  New  York.  He  waited  in  silence  to  see  if  the  Board  of 
Managers  would  approve  the  minutes  at  their  next  meeting; 
and  when  they  did  so  he  at  once  came  to  Pittsburg,  called  a 
meeting  of  the  members  of  the  Board,  and  demanded  that  they 
sign  a  request  to  Mr.  Frick  for  his  resignation.  He  said  he 
would  not  use  it  unless  he  had  to ;  but  that  he  wanted  to  be 
fortified  with  it.  Armed  with  this  he  called  upon  Mr.  Frick, 
whom  he  found  willing  to  resign  in  the  interests  of  harmony. 

Accordingly  the  next  day  Mr.  Frick  tendered  his  resignation 
and  it  was  accepted  by  the  Board.  Here  are  the  minutes  of  the 
meeting : 

"  At  a  meeting  of  the  Board  of  Managers  of  The  Carnegie 
Steel  Company,  Limited,  held  at  the  General  Offices  of  the 


326  ATTEMPT   TO  DEPOSE  FRICK 

Association,  Carnegie  Building,  Pittsburg,  Pa.,  at  12:30  P.M., 
Tuesday,  December  5,  1899,  there  were  present  MM.  Schwab 
(president),  Peacock,  Phipps,  Morrison,  Clemson,  Gayley  and 
Lovejoy  (secretary) ;  also  MM.  Andrew  Carnegie,  Henry  Phipps, 
George  Lauder  and  W.  H.  Singer. 

The  following  communication  was  read : 

'December  5th,  1899. 
GENTLEMEN : 

I  beg  to  present  my  resignation  as  a  member  of  your  Board. 
Yours  very  truly, 

H.  C.  FRICK. 

To 

THE  BOARD  OF  MANAGERS, 
The  Carnegie  Steel  Co.,  Ltd., 
Pittsburgh,  Pa.* 

On  motion,  (MM.  Clemson  and  Peacock),  the  resignation 
was  accepted,  with  the  sincere  thanks  of  the  Board  of  Mana- 
gers, both  as  such  and  as  representing  the  Shareholders ;  for 
efficient,  zealous  and  faithful  service  as  a  member  of  this  Board 
from  January  14,  1889,  to  the  present  day;  the  vote  being 
unanimous,  and  all  present  concurring." 

The  difficult  position  of  the  junior  partners  in  this  crisis  is 
graphically  stated  in  the  following  extract  from  a  letter  written 
by  Mr.  C.  M.  Schwab,  the  day  before  Mr.  Carnegie's  arrival  in 
Pittsburg : 

SUNDAY,  Dec.  3rd,  1899 

...  I  just  returned  from  New  York  this  morning.  Mr. 
Carnegie  is  en-route  to  Pittsburgh  to-day,  and  will  be  at  the 
offices  in  the  morning.  Nothing  could  be  done  with  him  look- 
ing towards  a  reconciliation.  He  seems  most  determined.  I 
did  my  best.  So  did  Mr.  Phipps.  I  feel  certain  he  will  give 
positive  instructions  to  the  Board  and  Stockholders  as  to  his 
wishes  in  the  matter.  I  have  gone  into  the  matter  carefully 
and  am  advised  by  disinterested  and  good  authority  that,  by 
reason  of  his  interest,  he  can  regulate  this  matter  to  suit  him- 
self— with  much  trouble  no  doubt,  but  he  can  ultimately  do  so. 
I  believe  all  the  Junior  members  of  the  Board  and  all  the  Junior 
Partners  will  do  as  he  directs.  Any  concerted  action  would  be 


JUNIOR   PARTNERS  FACE  RUIN  327 

ultimately  useless,  and  result  in  their  downfall.  Am  satisfied 
that  no  action  on  my  part  would  have  any  effect  in  the  end.  We 
must  declare  ourselves.  Under  these  circumstances,  there  is 
nothing  left  for  us  to  do  but  obey,  although  the  situation  the 
board  is  thus  placed  in  is  most  embarrassing. 

No  one  can  read  this  letter  without  sympathizing  with  Mr. 
Schwab.  On  the  one  hand  Carnegie,  the  majority  stockholder, 
could  force  him  to  vote  for  Frick's  expulsion  or  ruin  him  if  he 
resisted.  On  the  other  hand,  Schwab's  obligations  to  Frick 
and  their  friendship  for  years  made  his  subservience  to  Carne- 
gie almost  impossible.  This  is  undoubtedly  what  he  himself 
felt ;  for  he  had  always  freely  admitted  his  great  obligations  to 
Mr.  Frick.  Indeed,  he  had  frankly  attributed  his  success  to 
him.  "  If  I  have  anything  of  value  in  me,"  he  once  wrote, 
Mr.  Frick's  "method  of  treatment  will  bring  it  out  to  its 
full  extent " ;  and  he  "  regarded  with  more  satisfaction  than 
anything  else  in  life — even  fortune — the  consciousness  of  hav- 
ing won"  Mr.  Frick's  friendship  and  regard.  It  can  be- well 
imagined  that  it  was  with  great  reluctance  that  he  afterwards 
allowed  himself  to  be  forced  by  Carnegie  into  active  opposi- 
tion to  his  chief. 

With  Mr.  Frick's  resignation  from  the  chairmanship  of  the 
Board  the  dispute  seemed  ended;  Mr.  Carnegie  returning  to 
New  York  apparently  satisfied.  A  month  or  so  later,  however, 
he  returned  to  Pittsburg  with  an  elaborate  scheme  for  the  com- 
plete "ejecture"  of  Mr.  Frick.  Before  describing  this,  the 
further  course  of  the  coke  controversy  should  be  outlined. 

When  Mr.  Carnegie  was  in  Pittsburg  in  December  he 
quietly  began  to  lay  his  plans  for  war.  His  first  move  was  to 
try  to  win  over  Mr.  John  Walker. 

Mr.  Walker  was  one  of  the  minority  stockholders  of  the 
coke  company;  and  as  trustee  for  the  minor  heirs  of  his  old 
partner  Wilson,  he  had  kept  a  large  part  of  their  fortune  in  the 
Frick  Coke  Company.  He  was,  therefore,  doubly  interested  in 
the  controversy.  Mr.  Walker's  high  commercial  standing,  his 


328  ATTEMPT   TO   DEPOSE   FRICK 

fine  judgment  and  excellent  fighting  qualities,  made  him  an  ad- 
versary to  be  conciliated  if  possible ;  and  Mr.  Carnegie,  during 
this  visit,  sought  to  detach  him  from  Mr.  Frick. 

Some  ten  years  before  this,  when  Mr.  Walker  was  chair- 
man of  Carnegie,  Phipps  &  Co.,  a  personal  difference  had 
arisen  between  him  and  Carnegie,  and  he  withdrew  from  the 
firm.  Carnegie  now  offered  him  a  position  on  the  Board  of  the 
steel  company  and  an  interest  in  it,  in  exchange  for  his  hold- 
ings in  the  coke  company.  As  this  involved  abandoning  his 
friend  Frick  in  a  fight  which  the  latter  had  entered  into  to  safe- 
guard the  interest  of  all  minority  stockholders,  including  his 
own  and  those  of  the  widow  and  orphans  of  Carnegie's  old  boy 
companion — for  Wilson  was  one  of  The  Original  Six — Mr. 
Walker  declined  the  offer.  He  thereby  failed  to  make  several 
millions  of  dollars  which  would  otherwise  have  been  his. 

It  afterwards  transpired,  however,  that  Mr.  Walker  had  been 
mistaken  in  supposing  that  Mr.  Carnegie  wished  to  sacrifice 
the  interests  of  all  the  minority  stockholders  in  the  coke  com- 
pany. For  at  this  time  Mr.  Carnegie  told  Mr.  Schwab  to  quietly 
notify  Mr.  Walker  that  if  he  would  withdraw  his  opposition  to 
the  coke  contract,  the  matter  would  be  so  arranged  that  he  and 
those  he  represented  should  receive  the  same  profits  from  their 
coke  investments  as  they  would  if  the  steel  company  paid  full 
price  for  its  fuel.  Mr.  Schwab,  however,  did  not  dare  himself 
to  make  such  an  offer  to  a  man  like  Mr.  Walker;  and  he  asked 
another  member  of  the  Board  of  Managers  to  do  it.  This  gen- 
tleman also  declined,  as  did  every  other  member  of  the  Board 
to  whom  the  matter  was  submitted ;  and  Mr.  Walker  lost  the 
opportunity  of  declining  the  bribe.  And  if  he  reads  this  book 
he  will  probably  learn  for  the  first  time  of  Mr.  Carnegie's 
benevolent  intentions. 

Failing  thus  to  win  Mr.  Walker  to  his  side  Mr.  Carnegie 
promptly  included  him  in  the  fight,  which  he  now  carried  right 
into  his  adversary's  camp. 

It  will  be  remembered  that  the  majority — a  little  more  than 


AN  AMAZING    CONTRACT  329 

half — of  the  coke  company's  stock  belonged  to  Carnegie  and  / 
the  steel  company.  On  the  9th  of  the  following  January 
(1900)  the  usual  stockholders'  meeting  was  held;  and,  by  the 
power  afforded  by  their  large  holdings,  the  Carnegies  increased 
the  Board  of  Directors  from  five  to  seven,  dropped  Messrs.  John 
Walker  and  Giles  B.  Bosworth  from  the  Board,  and  elected  to 
the  directorate  six  of  the  managers  of  the  steel  company.  Four 
of  these,  Messrs.  Gayley,  Moreland,  Clemson,  and  Morrison,  had 
not  previously  been  stockholders ;  but  to  qualify  them  to  serve 
as  directors,  each  had  now  five  shares  put  in  his  name.  The 
others  were  Lauder,  Lynch,  and  Frick. 

On  January  24th  the  majority  in  the  new  Board  voted  to  the  « 
Carnegie  Steel  Company  a  contract  for  all  the  coke,  at  $1.35  a  -- 
ton,  that  that  company  could  use  in  its  furnaces  for  five  years, 
commencing   January   ist,    1899,  amounting  approximately  to 
2,500,000  tons  a  year,  or  about  one-third  of  the  entire  product 
of  the  H.  C.  Frick  Coke  Company;  and  this  agreement,  pre-    - 
viously  prepared  and  executed  by  the  Carnegie  Steel  Company, 
was  signed  by  Mr.  Lynch,  president  of  the  coke  company,  under   ' 
his  own  protest  and  that  of  Mr.  Frick.      The  market  price  of   • 
coke  was  then  $3.50  a  ton. 

This  surprising  contract,  being  made  retroactive,  required    < 
the    coke    company    to    refund    to    the    Carnegies   a   sum    of 
$596,000  paid  on  account  of   coke    sold   during  the  previous 
year.      The  further   loss  to   the  coke    company  at    prevailing 
prices  was  $1.65  a  ton,  or  something  like  $4,000,000  a  year. 
This  is  probably  the  most  astonishing  thing  that  ever  happened    / 
in  the  course  of  the  Carnegie  Steel  Company's  amazing  history. 

As  soon  as  the  minority  stockholders  heard  of  these  pro- 
ceedings they  sent  the  following  protest  to  the  president  and 
Board  of  Directors  of  the  H.  C.  Frick  Coke  Company,  and  re- 
ceived the  appended  reply : 

GENTLEMEN  :  I  have  been  informed  that  your  Board  of  Di- 
rectors on  Jan.  24th,  1900,  passed  a  resolution  intended  to  ratify 
an  alleged  contract  with  the  Carnegie  Steel  Company,  Ltd., 


330  ATTEMPT   TO   DEPOSE  FRICK 

whereby  your  company  is  to  supply  to  the  latter  all  the  coke  it 
may  require  for  use  in  its  furnaces  for  five  years,  commencing 
Jan.  i,  1899,  for  $1.35  per  ton,  delivered  on  cars  at  your  works, 
and  that  your  company  has  signed  a  written  memorandum  of 
such  contract. 

As  a  stockholder  in  your  company,  I  protest  against  any 
such  contract,  and  I  demand  that  you  do  nothing  in  recognition 
thereof,  and  especially  that  you  do  not  ship  or  bill  any  coke  to 
the  Carnegie  Steel  Company,  Limited,  thereunder;  and  that 
you  do  not  settle  with  said  company  for  coke  shipped  to  it  since 
Jan.  ist,  1899,  at  the  price  named  in  said  contract,  or  at  any 
price  other  than  the  market  price  at  the  time  of  delivery.  I 
deny  that  such  contract  was  ever  made  until  you  attempted  to 
do  so  on  Jan.  24th,  1900.  This  contract  is  for  many  reasons 
unfair  and  fraudulent  and  against  the  minority  stockholders  of 
the  H.  C.  Frick  Coke  Company.  It  is  made  by  those  who 
represent  the  majority  of  stockholders,  really  in  the  interest  of 
such  majority,  as  against  the  interests  of  the  H.  C.  Frick  Coke 
Company  and  the  minority  stockholders  therein.  The  market 
price  of  coke  on  Jan.  24th,  1900,  was  at  least  $3.50  per  ton,  and 
yet  this  contract,  covering  almost  one-third  of  all  coke  manufac- 
tured by  the  company,  fixes  a  price  of  $1.35  per  ton.  In  many 
other  respects  it  unfairly  and  dishonestly  favors  the  majority 
stockholders  of  the  coke  company  to  the  loss  of  the  minority 
stockholders. 

The  Carnegie  Steel  Company,  Limited,  and  Andrew  Car- 
negie (who  owns  more  than  one-half  of  the  interest  in  the  steel 
company)  own  together  more  than  one-half  of  the  stock  of  the 
H.  C.  Frick  Coke  Company.  A  majority  of  the  present  Board 
of  Directors  of  the  coke  company  are  managers  and  partners  in 
the  Carnegie  Steel  Company.  It  was  this  majority  who  forced 
this  contract  in  favor  of  the  Carnegie  Steel  Company,  Limited, 
on  Jan.  24th,  1900. 

I  demand  that  you  rescind  the  said  action  of  your  board  in 
favor  of  said  contract;  that  you  take  such  further  action  as 
may  be  necessary  to  rescind  and  annul  said  contract.  If  you 
refuse  to  act,  then  I  ask  that  you  call  a  meeting  of  the  stock- 
holders of  the  coke  company  to  take  action  and  pass  upon  the 
questions  herein  raised,  and  upon  the  requests  I  now  make. 

Please  advise  me  promptly  what  your  company  proposes  to 
do  in  the  matter,  as  it  is  my  intention  to  take  proper  legal  steps 
to  prevent  your  so  doing,  if  you  intend  carrying  out  such  pre- 
tended contract.  Yours  truly, 

S.    L.     SCHOONMAKER. 


DISINTERMENT  OF  THE  IRONCLAD         331 

PITTSBURGH,  Feb.  6th,  1900. 

Mr.  S.  L.  Schoonmaker,  New  York  City. 

MY  DEAR  SIR  :  I  beg  to  advise  that  I  received  your  com- 
munication of  i  st  instant,  addressed  to  the  President  and  Board 
of  Directors  of  the  H.  C.  Frick  Coke  Company,  and  I  sub- 
mitted the  same  to  the  Board  at  a  meeting  held  Feb.  6th,  1900, 
when  the  following  motion  was  adopted : 

'  That  the  President  be  instructed  to  carry  out  the  contract 
between  the  H.  C.  Frick  Coke  Company  and  The  Carnegie 
Steel  Company,  Limited,  dated  January  ist,  1899,  and  all  its 
terms  and  provisions,  and  that  he  inform  Messrs.  Walker  and 
Schoonmaker  that  he  is  so  directed  by  the  Board. ' 
Very  Truly  Yours, 

THOS.  LYNCH, 

President. 

Thereupon  suit  was  brought  by  Mr.  Walker  and  the  other 
minority  stockholders  to  enjoin  the  coke  company  from  selling, 
shipping,  and  delivering  any  coke  to  the  steel  company  under 
the  pretended  contract. 

In  the  mean  time  important  events  were  happening  in  the 
council-chambers  of  the  steel  company.  The  peaceful  accept- 
ance of  Mr.  Frick's  resignation  as  chairman  of  the  Board  proved 
but  a  lull  in  the  storm.  In  New  York  Mr.  Carnegie  was  devis-  ' 
ing  a  plan  for  the  rehabilitation  of  an  extinct  iron-clad  agree- 
ment, so  as  to  make  it  applicable  to  the  new  situation.  Then, 
in  January,  he  returned  to  Pittsburg,  called  a  meeting  of  the 
Managers,  and  had  them  go  through  the  ritual  he  had  prepared. 

At  one  of  their  interviews  about  this  time  Mr.  Frick  had 
offered  to  sell  his  interest  in  the  company  to  Mr.  Carnegie  at  a 
price  to  be  fixed  by  arbitrators.  This  being  refused,  he  offered 
to  buy  Carnegie's  on  the  same  terms.  Mr.  Carnegie  gasped 
with  astonishment.  It  was  the  most  direct  challenge  of  his 
supremacy  which  he  had  ever  received.  The  proceedings  of 
the  Managers,  under  Carnegie's  direction,  now  contemplated 
the  forcible  seizure  of  the  Frick  interest  at  book  values.  How 


332 


ATTEMPT  TO   DEPOSE  FRICK 


inadequate  these  were  will  be  seen  from  the  following  state- 
ment of  some  of  them,  side  by  side  with  the  profits  made  dur- 
ing the  previous  year : 

Book  value, 
Net  profit,  1899-  Nov.  ist,  1899. 

Edgar  Thomson  Furnaces $3,829,716.68  \ 

SteelWorks 614,518.51  J-     $10,258,703.98 

"  Foundry 370,866.80) 

Duquesne  Blast  Furnaces 2,983,094. 79  5,089,967. 52 

SteelWorks 1,104,728.39  2,057,745.83 

Homestead  Steel  Works 4,564,413.63  11,909,199.55 

Carrie  Furnaces 820,638.65  829,625.42 

Lucy  Furnaces 1,303, 524-37  1,251,869.99 

Keystone  Bridge  WTorks 13,682.68  7*7,776.49 

Upper  Union  Mills 1,091,857.88  1,000,000.00 

Lower  Union  Mills 438,052.03  700,000.00 

Scotia  Ore  Mines 1,695-74 

Larimer  Coke  Works 17,276.56 

Youghiogheny  Coke  Works (loss)  35. 73 

Sundries — including 

H.  C.  Frick  Coke  Company $1,253,853 

Oliver  Iron  Mining 1,067,000 

Carnegie  Natural  Gas 420,000 

Union  Railroad 100,000 

Etc.,  etc 3,845,949-36 

Borrowed  from  Contingency  Fund 50,570.80 

Net  earnings  for  year $21,000,000.00 

While  the  Board  was  still  in  session  Mr.  Carnegie  went  out 
to  see  Mr.  Frick,  to  demand  his  stock  at  these  book  values. 
Mr.  Frick,  who  had  remained  outwardly  unmoved  amid  all  the 
horrors  of  the  Homestead  battle  and  cool  in  presence  of  the 
assassin,  felt  outraged  by  the  intrusion  of  Andrew  Carnegie  on 
such  a  mission;  and  his  anger  burst  out  like  a  flame.  Carne- 
gie hastily  retreated,  and  returned  to  the  Board  room  white  with 
emotion;  and  later,  when  the  affair  came  into  the  courts,  he 
made  an  affidavit  charging  Mr.  Frick  with  an  ungovernable 
temper. 

The  further  course  of  this  affair,  in  which,  at  the  instigation 
of  Mr.  Carnegie,  all  the  partners  except  Messrs.  Hy.  Phipps, 
Love  joy,  and  Curry  joined,  is  summarized  in  Appendix  A  from 
Mr.  Prick's  own  narrative,  which  formed  part  of  a  bill  in  equity 
filed  in  the  Court  of  Common  Pleas  a  month  or  so  later.  The 


SENSATIONAL  REVELATIONS  333 

revelations  of  the  stupendous  profits  of  the  steel  industry  con- 
tained in  this  plea  set  the  country  agog,  so  that  interest  in  the 
contest  itself  became  almost  secondary.  Every  newspaper  in 
the  land  printed  long  extracts  from  the  pleadings ;  and  columns 
of  comments  were  published  on  the  amazing  exhibition  of  in- 
dustrial efficiency  thus  presented.  Had  the  Moore  option  been 
valid  at  this  time  there  would  have  been  no  difficulty  in  raising 
a  hundred  million  dollars.  In  other  lands  the  litigation  and 
the  secrets  it  revealed  attracted  the  same  general  attention. 
Everywhere  the  hope  was  expressed  that  the  suit  would  be 
allowed  to  reach  the  courts.  It  was  pointed  out  that  "  what  legis- 
lative bodies  and  committees  of  inquiry  had  failed  to  accomplish 
might  be  reached  if  the  secrets  of  the  great  corporation  were 
passed  in  review  through  the  courts  "  ;  and  it  .was  not  only  sensa- 
tion-loving and  curiosity-seeking  people  who  wanted  to  know 
more,  but  legislators  and  publicists  of  every  kind. 

The  Carnegie  answer  was  filed  on  March  I2th.  It  claimed 
that  the  plan  for  forming  the  limited  partnership,  which  Frick 
had  declared  to  be  a  general  one,  was  devised  by  Frick  himself, 
and  that  he  acquired  much  of  his  interest  through  the  working 
of  the  so-called  iron- clad  agreement.  It  was  denied  that  on 
December  3ist,  1899,  tne  association  had  assets  or  property, 
which  in  its  legal  capacity  it  could  transfer,  worth  $250,000,- 
ooo.  While  it  was  admitted  that  Mr.  Frick  proved  a  valuable 
member  to  the  company,  it  was  asserted  that  "  notwithstanding 
his  ability  "  he  "  is  a  man  of  imperious  temper,  impatient  of 
opposition,  and  disposed  to  make  a  personal  matter  of  every 
difference  of  opinion,  even  on  questions  of  mere  business 
policy.  At  times,  moreover,  he  gives  way  to  violent  outbursts 
of  passion,  which  he  is  either  unwilling  or  unable  to  control. 
He  demands  absolute  power  and  without  it  is  not  satisfied. " 
The  answer  maintained  that  the  refusal  to  submit  their 
differences  to  arbitration  was  because  the  company  pro- 
posed at  all  times  to  maintain  the  integrity  of  the  iron-clad 
contract. 


334 


ATTEMPT   TO  DEPOSE   FRICK 


There  were  no  disclosures,  however.  The  Carnegies  had 
had  more  than  enough  of  them ;  and  even  while  this  answer 
was  being  prepared  efforts  were  made  to  stop  the  litigation. 
With  a  studied  display  of  indifference  the  principal  Carnegie 
officials  absented  themselves  on  alleged  vacations;  but  their 
movements  were  conducted  with  method.  Andrew  Carnegie 
went  golfing  in  Florida,  but  stopped  in  Washington  long  enough 
to  transmit  through  Mr.  Lawrence  Phipps  the  first  overture  for 


TRAVELING-  IN 

tOROPft 

HURR.V  TO 

"RETURN. 


THE  GREAT  SHERIFFS  PUZZLE— How  .to  find  Carnegie  and  his  forty,  partners. 

—From  a  Pittsburg  paper. 

peace.  The  terms  accompanying  this  were  refused  and  others 
suggested;  and  these  in  turn  were  rejected  by  Carnegie.  This 
rejection  resulted  in  Mr.  Prick's  obtaining  sixty  per  cent,  more 
in  the  final  settlement  than  he  otherwise  would  have  had. 
Then  Mr.  Hy.  Phipps  took  a  hand  in  the  negotiations ;  and,  hav- 
ing previously  reached  an  understanding  with  Mr.  Carnegie,  he 
had  little  difficulty  in  winning  the  adhesion  of  Messrs.  Frick, 
Lovejoy,  and  Walker  to  a  scheme  of  consolidation  and  reorgani- 
zation that  should  safeguard  the  interests  of  all  and  restore  an 


SHOWERS   OF  GOLD 


335 


outward  semblance  of  peace  to  the  association.  Five  days  after 
the  filing  of  the  Carnegie  answer  a  peace  conference  met  at  At- 
lantic City,  when  the  Carnegie  Steel  Company  underwent  the 
last  metamorphosis  before  its  final  absorption  in  the  United 
States  Steel  Corporation,  and  dollars  began  to  rain  down  upon 
the  partners  faster  than  they  could  count  them. 


CHAPTER  XXI 
THE    FAILURE   OF    THE  IRON-CLAD 

THE  settlement  of  this  historic  litiation 


out  of  court  before  any  evidence  was 
taken  left  the  public  in  doubt  as  to  the 
legal  value  of  the  document  known 
as    the    iron-clad    agreement.     As 
this    agreement    had  an    important 
influence   on    the    history    of    the 
several  Carnegie  organizations,  some 
account  of  it  and  its  failure  to  work  the 
ejecture  "    of  Mr.  Frick  is   called  for  in 
this  narrative  ;   especially  as  it  is  not  likely 
that   any  frank  statement   concerning   it    will    ever   be  made 
elsewhere. 

In  1884  the  practice  was  inaugurated  of  rewarding  excep- 
tional services  of  employees  by  crediting  them  with  an  interest 
in  the  association;  Messrs.  Curry,  Moore,  Borntraeger,  and 
Abbot  being  the  first  to  receive  this  favor.  The  book  value 
of  the  interests  thus  assigned  was  charged  against  recipients  ; 
and  the  shares  were  held  by  the  company  as  security  until  the 
indebtedness  had  been  paid  off.  Usually  the  profits  alone 
sufficed  to  liquidate  the  debt. 

During  the  next  three  years  other  employees  were  similarly 
rewarded  ;  and  to  meet  this  new  condition  of  debtor  partners  a 
plan  of  automatic  ejecture  was  devised,  so  that  no  junior  part- 
ner need  be  kept  in  the  association  any  longer  than  his  favor 
lasted.  This  was  the  iron-clad  agreement  of  1887.  It  was  an 
excellent  device;  for  while  serving  as  an  incentive  to  further 
efforts,  such  a  revokable  interest  also  kept  the  "  young  geniuses  " 

336 


AN  ENGINE    OF  OPPRESSION  337 

in  a  properly  humble  frame  of  mind.  But  there  was  no  thought 
of  applying  this  iron-clad  to  the  other  partners,  whose  interests 
were  paid  up.  That  was  an  afterthought. 

In  1892,  on  the  consolidation  of  the  several  companies,  a 
new  iron-clad  agreement  was  drawn  up.  Concerning  this  docu- 
ment Mr.  Henry  Phipps  afterwards  made  the  following  state- 
ment : 

"  When  the  consolidation  papers  were  agreed  to  by  Mr. 
Carnegie  and  me,  at  his  place  near  Windsor,  England,  in  1892, 
it  was  understood  that  the  '  Iron-clad '  should  only  apply  to 
debtor  partners,  or  employees,  which  was  the  intent  of  the 
paper  of  1887.  Of  course  much  was  left  to  the  honor  of  the 
Managers,  who  were  then,  and  in  whom  it  was  not  unreasonable 
for  me  to  impose  implicit  confidence.  Never  has  it  been  used, 
to  my  knowledge,  and  I  am  confident  the  agreement  would 
never  have  been  made  an  engine  of  oppression  and  robbery. 

This  information  was  again  vouchsafed  me  when  I  signed  a 
paper  relating  to  my  death,  and  Carnegie  said  this  was  only  to 
apply  to  debtor  partners,  or  employees,  which  was  the  intent  of 
the  paper  of  1887.  '  But,'  I  replied,  '  there  are  clauses  in  the 
agreement  that  are  unjust/  and  he  replied,  '  Harry,  I  am  ill,  and 
am  going  abroad,  and  fix  it  to  your  satisfaction. '  On  such  a 
promise,  so  clear  and  explicit,  I  would  have  done  anything  for 
my  friend,  and  especially  in  his  condition. 

I  am  very  sorry  to  say  that  since  then  he  has  shown  no 
willingness  to  correct  the  agreement  as  promised." 

In  apparent  conformity  with  this  understanding,  limiting  its 
application  to  debtor  partners,  this  iron-clad  of  1892  was  not 
signed  by  Messrs.  Carnegie,  Phipps,  and  Lauder.  Most  of  the 
other  partners  signed  it,  but  not  all.  Under  its  terms  some 
interests  of  deceased  or  retiring  members  were  bought  by  the 
company;  but  no  "ejecture"  took  place. 

In  1897  a  new  and  more  stringent  agreement  was  drawn 
up,  intended  to  reach  other  than  debtor  partners ;  and  this  was 
signed  by  Andrew  Carnegie  and  sent  from  abroad  on  October 
3d,  with  a  letter  to  the  Board  of  Managers,  saying: 

"  I  have  signed  the  paper  making  these  corrections,  because 
22 


338  THE  FAILURE    OF  THE  IRON-CLAD 

I  wished  you  to  have  something  that  will  keep  the  Firm  right 
so  far  as  my  interest  is  concerned ;  but,  of  course,  you  will  get 
all  the  signatures  upon  one  corrected  paper,  by  and  by. " 

This,  however,  was  never  done.  Andrew  Carnegie's  was 
the  only  signature  ever  appended  to  this  document.  Concern- 
ing it  Mr.  Phipps  wrote  on  October  4th  from  London : 

"  Please  inform  the  Chairman,  President  and  Board  of  Mana- 
gers that  I  refuse  to  sign  the '  Iron-clad  '  or  any  paper  of  a  simi- 
lar character,  and  that  I  shall  resist  the  buying  of  the  Com- 
pany's Stock  as  the  proposed  Agreement  contemplates,  and 
thereby  creating  liabilities  of  which  we  have  quite  sufficient. 
Any  business  man  will  admit,  and  no  one  will  deny,  that  such 
debts  are  foreign  to  the  purpose  for  which  o'ur  Company  was 
formed.  Better  new  capital  than  no  capital,  which  would  be  the 
position  in  which  we  would  be  in  if  any  such  project  were  con- 
summated. Besides  the  act  would  be  clearly  illegal. 

For  these  and  other  good  reasons,  I  beg  that  no  action  in 
the  matter  be  taken." 

So  the  attempt  to  extend  the  provisions  of  the  iron-clad 
failed,  and  the  situation  remained  as  before. 

A  futile  effort  was  afterwards  made  to  reach  a  provisional 
agreement ;  and  nothing  more  was  attempted  until  Mr.  Carne- 
gie tried  to  secure  the  "  ejecture  "  of  Mr.  Frick.  This  he  sought 
to  accomplish  in  an  original  and  ingenious  way.  Having 
secured  the  resignation  of  Mr.  Frick  from  the  chairmanship  of 
the  company,  Mr.  Carnegie  appeared  before  the  Board  of  Mana- 
gers on  January  8th,  1900,  and  offered  and  had  passed  the 
following  resolution : 

"  Whereas,  as  appears  by  the  Minutes  of  October  19, 
1897,  a  proposed  Supplemental  Agreement,  dated  September 
i,  1897,  to  the  original  Agreement,  appearing  in  the  Minutes 
of  January  18,  1887,  was  signed  by  Andrew  Carnegie,  condi- 
tioned upon  all  members  signing  the  same,  but  was  objected  to 
by  Henry  Phipps,  who  refused  to  sign  the  same ;  and  conse- 
quently, that  it  has  not  been  signed  by  several  other  members 
of  the  firm,  and  is,  therefore,  of  none  effect;  Now,  therefore, 
be  it 


INTERESTING   RITUAL  339 

Resolved :  That  the  Resolution  of  October  19,  1897,  ap- 
proving said  Supplemental  Agreement,  passed  in  the  hope  that 
Mr.  Phipps  would  upon  reflection  withdraw  his  opposition  and 
all  members  sign,  is  hereby  rescinded ;  and  the  Board  decides 
that  no  further  steps  be  taken  with  the  proposed  Supplement, 
thus  leaving  the  original  Agreements  in  full  force. " 

The  minutes  then  relate  that 

"  Without  a  motion,  the  Secretary  was  directed  to  obtain  to 
the  Supplemental  'Iron-clad  Agreement,'  dated  July  i,  1892, 
the  signatures  of  the  present  members  of  this  Association  who 
have  not  signed  the  same,  it  having  not  been  presented  for  signa- 
ture to  the  members  admitted  while  the  aforesaid  Supplemental 
Agreement  of  September  i,  1897,  was  being  drawn  up,  consid- 
ered, revised  and  after  its  adoption. " 

In  other  words,  by  expunging  a  minute  on  the  books  of  the 
Carnegie  Steel  Company,  it  was  sought  to  revive  an  agreement 
made  thirteen  years  before  by  the  members  of  an  entirely  differ- 
ent corporation,  Carnegie  Brothers  &  Co.  Then  an  attempt 
was  made  to  graft  onto  this  Carnegie  Brothers'  agreement 
"a  supplemental  iron-clad"  of  the  Carnegie  Steel  Company 
eight  years  old,  which  had  never  been  signed  by  the  principal 
owners.  To  make  this  double-decked  instrument  effective, 
there  were  now  added  the  signatures  of  Carnegie  himself 
and  of  some  members  who  had  no  existence  at  the  time  the 
agreement  was  signed  by  Mr.  Frick,  against  whom  all  this 
ingenuity  was  directed.  And  it  was  on  these  proceedings  that 
the  Carnegie  Steel  Company  rested  its  case  against  Henry  C. 
Frick  in  the  greatest  lawsuit  ever  commenced  in  the  State  of 
Pennsylvania. 

The  document  itself,  called  "the  Supplemental  Iron-clad" 
for  the  first  time  in  the  minutes  of  the  meeting  of  January  8th, 
1900,  reads  as  follows  : 

This  agreement,  Made  this  first  day  of  July,  A.D.,  1892,  and 
on  certain  dates  thereafter,  as  shown,  between  The  Carnegie 
Steel  Company,  Limited,  party  of  the  first  part,  and  each  one 


340  THE  FAILURE    OF  THE  IRON-CLAD 

of  the  members  of  that  Association  who  has  hereunto  affixed  his 
name,  party  of  the  second  part,  witnesseth : 

(I)  That  the  party  of  the  second  part,  for  and  in  consider- 
ation of  the  execution  and  delivery  of  this  agreement  by  each 
of  the  other  active  members  of  said  Association,  The   Car- 
negie Steel  Company,  Limited,  and  in  consideration  of  the  sum 
of  One  Dollar  in  hand  paid  by  the  party  of  the  first  part,  the 
receipt  whereof,  by  the  signing  hereof,  is  hereby  acknowledged, 
as  well  as  for  other  good  and  valuable  considerations,  to  him 
moving,  does  hereby  covenant,  promise  and  agree  to  and  with 
the  party  of  the  first  part,  that  he,  the  party  of  the  second  part, 
at  any  time  hereafter  when  three-fourths  in  number  of  the  per- 
sons holding  interests  in  said  first  party,  and  three-fourths  in 
value  of  said  interests,  shall  request  him,  the  said  party  of  the 
second  part,  so  to  do,  will  sell,  assign  and  transfer  to  said  first 
party,  or  to  such  person  or  persons  as  it  shall  designate,  all  of 
his,  the  said  party  of  the  second  part,  interest  in  the  Limited 
partnership  of  The  Carnegie  Steel   Company,   Limited.     The 
interest  shall  be  assigned  freed  from  all  liens  and  encumbrances 
or  contracts  of  any  kind,  and  this  transfer  shall  at  once  termi- 
nate all  the  interest  of  said  party  of  the  second  part  in  and  in 
connection  with  said  The  Carnegie  Steel  Company,  Limited. 

(II)  The  request  of  the  requisite  number  of  members  and 
value  of  interests  shall  be  evidenced  by  a  writing  signed  by 
them  or  their  proper  Agents  or  Attorneys  in  Fact ;  and  a  copy 
thereof  shall  be  either  served  upon  the  party  whose  interest  it 
is  proposed  to  buy,  or  mailed  to  him  at  his  post  office  address ; 
at  least  five  (5)  days  before  the  day  fixed  in  said  request  to  make 
said  transfer  and  assignment. 

(III)  The  party  of  the  first  part  covenants  and  agrees  that 
it  will  pay  unto  the  party  so  selling  and  assigning,  the  value  of 
the  interest  assigned,  as  it  shall  appear  to  be  on  the  books  of 
said  The  Carnegie  Steel  Company,  Limited,  on  the  first  day 
of  the  month  following  said  assignment. 

Said  payment  shall  be  in  manner  as  follows : 

If  the  interest  assigned  shall  not  exceed  two  (2)  per  centum 
of  the  Capital  Stock  at  par,  the  same  shall  be  paid  for  as  follows  : 

One-fourth  cash  within  ninety  (90)  days  of  the  date  of  the 
assignment,  and  the  balance  in  two  equal  annual  payments  from 
the  date  of  the  assignment,  to  be  evidenced  by  the  notes  of  said 
first  party. 

If  the  interest  assigned  shall  exceed  two  (2)  per  centum, 
but  shall  not  exceed  four  (4)  per  centum  of  the  Capital  Stock 
at  par,  then  the  same  shall  be  paid  for  as  follows  :  One-fourth 


THE  DOCUMENT  QUOTED  341 

cash  in  six  months  after  the  date  of  the  assignment,  and  the 
balance  in  three  equal  annual  payments  from  the  date  of  the 
assignment,  to  be  evidenced  by  the  notes  of  the  said  first  party. 

If  the  interest  assigned  shall  exceed  four  (4)  per  centum, 
but  shall  not  exceed  twenty  (20)  per  centum  of  the  Capital 
Stock  at  par,  then  the  same  shall  be  paid  for  as  follows :  One- 
fourth  cash  within  six  months  after  the  date  of  the  assignment, 
and  ttje  balance  in  five  equal  annual  payments  from  the  date  of 
the  assignment,  to  be  evidenced  by  the  notes  of  said  first  party. 

If  the  interest  assigned  shall  exceed  twenty  (20)  per  centum 
of  the  Capital  Stock  at  par,  then  the  same  shall  be  paid  for  as 
follows:  One-fourth  cash  within  eight  months  from  the  date  of 
the  assignment,  and  the  balance  in  ten  equal  annual  payments 
from  the  date  of  the  assignment,  to  be  evidenced  by  the  notes 
of  said  first  party. 

All  deferred  payments  shall  bear  interest  at  six  per  centum 
per  annum,  payable  semi-annually. 

(IV)  This  agreement,  and  the  option  the  party  of  the  second 
part  hereby  gives  to  the  party  of  the  first  part,  is  hereby  de- 
clared to  be  irrevocable,  and  that  it  may  be  carried  out  in  good 
faith,  and  notwithstanding  any  effort  on  the  part  of  the  party  of 
the  second  part  to  evade  it,  the  party  of  the  second  part  does 
hereby  appoint  the  person,  who,  at  the  time  when  he  is  called 
upon  to  act,  is  Chairman  of  the  party  of  the  first  part,  the  At- 
torney in  Fact  for  said  party  of  the  second  part,  for  him  and  in 
his  name,  place  and  stead  to  assign  and  transfer  the  said  inter- 
est in  said  The  Carnegie  Steel  Company,  Limited,  whenever 
under  this  agreement  it  would  be  the  duty  of  said  party  of  the 
second  part  so  to  do. 

This  appointment  is  also  irrevocable;  is  coupled  with  the 
interest  of  said  party  of  the  second  part  in  said  The  Carnegie 
Steel  Company,  Limited,  and  will  justify  and  warrant  the  said 
Attorney  in  Fact  to  act  for  the  said  party  of  the  second  part  in 
the  premises  just  as  efficaciously  after  the  death  of  said  party 
of  the  second  part,  or  after  said  party  of  the  second  part  has 
attempted  to  revoke  this  power  of  attorney  or  evade  his  agree- 
ment, as  if  said  party  of  the  second  part  were  alive  and  living 
up  to  it  in  entire  good  faith. 

(V)  Death  shall  not  revoke,  alter  or  impair  any  of  the  terms 
of  this  contract,  but  the  first  party  shall,  after  the  death  of  the 
party  of  the  second  part,  have  the  following  time  to  elect  to  buy 
his  interest  on  the  terms  hereinbefore  set  out : 

If  the  interest  does  not  exceed  four  (4)  per  centum,  four 
months. 


342          THE  FAILURE   OF  THE  IRON-CLAD 

If  the  interest  exceeds  four  (4)  per  centum,  but  does  not  ex- 
ceed twenty  (20)  per  centum,  eight  months. 

If  the  interest  exceeds  twenty  (20)  per  centum,  twelve 
months,  and  the  said  party  of  the  second  part  to  this  agreement 
does  hereby  direct  his  personal  representatives,  after  the  death 
of  him,  the  said  party  of  the  second  part,  to  approve,  join  in  and 
perfect  any  transfer  his  said  Attorney  in  Fact  may  make,  and 
the  said  Executor  or  Executors  or  Administrator  or  Adminis- 
trators of  the  party  of  the  second  part  shall  carry  out  this  con- 
tract, and  all  its  provisions,  just  as  if  said  representatives  had 
themselves  made  this  agreement. 

(VI)  This  agreement  is  hereby  declared  to  be  a  lien  and 
encumbrance  upon  the  interest  of  said  party  of  the  second  part 
in  said  The  Carnegie  Steel  Company,  Limited.  No  attempt  of 
the  said  party  of  the  second  part  voluntarily  to  sell,  pledge  or 
mortgage,  and  no  proceedings  adversely  against  the  said  party 
of  the  second  part  by  execution,  process  of  law,  or  Equity  of 
any  kind,  bankruptcy  or  insolvency,  shall  in  any  way,  shape  or 
form  affect,  impair  or  alter  this  agreement,  or  any  part  of  it, 
or  take  from  under  its  operation  the  respective  interest  of  said 
party  of  the  second  part  from  the  clog  hereof. 

Both  the  parties  hereto  agree  and  declare  that  it  is  the  set- 
tled policy  of  The  Carnegie  Steel  Company,  Limited,  and  of 
the  party  of  the  second  part,  in  entire  good  faith,  and  with  all 
effort  on  our  part  to  carry  out  its  true  spirit  and  meaning,  this 
agreement ;  being  satisfied  that  if  we  do  so,  it  will  be  greatly 
to  the  benefit  of  The  Carnegie  Steel  Company,  Limited,  and  to 
the  party  of  the  second  part  as  a  member  thereof;  and  that  any 
effort  on  the  part  of  said  party  of  the  second  part  to  evade  any  of 
the  provisions  of  the  same  will  most  properly  prove  his  unfitness 
to  be  connected  with  said  The  Carnegie  Steel  Company,  Limited. 

In  witness  whereof,  the  party  of  the  first  part  has  hereunto 
set  its  common  seal,  attested  by  the  signatures  of  its  Chairman 
and  Secretary,  and  approved  by  two  of  its  Managers;  and  the 
party  of  the  second  part  has  hereunto  set  his  hand  and  seal  the 
day  and  year  first  above  given. 

THE  CARNEGIE  COMPANY,    LIMITED, 
By  H.  C.  FRICK, 

Chairman. 

Attest :  Approved : 

(SEAL)  F.  T.  F.  LOVEJOY,  J.  G.  A.   LEISHMAN, 

Secretary.  Manager. 

F.  T.    F.    LOVEJOY, 
Manager. 


THE  NOTICE   OF  "  EJECTURE  "  343 

Then  follow  a  number  of  signatures,  some  made  "  on  the 
day  and  year  first  above  given,"  namely,  July  ist,  1892,  and 
others,  including  Andrew  Carnegie's,  nearly  eight  years  later. 

On  the  strength  of  this  agreement  the  following  notice  was 
now  served  on  Mr.  Frick,  Mr.  Schwab  having  been  delegated 
by  Mr.  Carnegie  to  obtain  signatures  to  it : 

"  Under  the  provisions  of  a  certain  Agreement  between  The 
Carnegie  Steel  Company,  Limited,  and  the  partners  composing 
it,  known  as  and  generally  referred  to  as  the  'Iron  Clad' 
Agreement,  we,  the  undersigned,  being  three-fourths  in  num- 
ber of  the  persons  holding  interests  in  said  Association,  and 
three-fourths  in  value  of  said  interests,  do  now  hereby  request 
Henry  C.  Frick  to  sell,  assign  and  transfer  to  The  Carnegie 
Steel  Company,  Limited,  all  of  his  interest  in  the  capital  of 
The  Carnegie  Steel  Company,  Limited,  said  transfer  to  be 
made  as  at  the  close  of  business  January  31,  1900,  and  to  be 
paid  for  as  provided  in  said  Agreement. 

Done  at  Pittsburg,  Pa.,  this  loth  and  I  ith  days  of  January, 
1900. 

C.  M.  SCHWAB.  ANDREW  CARNEGIE. 
GIBSON  D.    PACKER.  GEO.  LAUDER. 

D.  G.  KERR.  A.  M.   MORELAND. 
H.  E.   TENER,  JR.  JAMES  GAYLEY. 
A.  C.  CASE.  D.  M.  CLEMSON. 
JNO.   McLEOD.  THOS.  MORRISON. 
LEWIS  T.  BROWN.  L.  C.   PHIPPS. 
GEO.   E.  McCAGUE.  CHAS.  L.   TAYLOR. 
W.  B.    DJCKSON.  JNO.   C.    FLEMING. 

E.  F.  WOOD.  W.  W.  BLACKBURN. 
GEO.    MEGREW.  H.   P.  BOPE. 

J.  E.   SCHWAB.  JAMES  SCOTT. 

HOMER  J.    LINDSAY.  W.  H.    SINGER. 

ALEXR.  R.    PEACOCK.  W.   E.    COREY. 

MlLLARD    HUNSIKER,  GEO.    H.    WlGHTMAN. 

per    C.     M.    SCHWAB,  J.  OGDEN  HOFFMAN. 

(Power  Attorney).  CHAS.  W.  BAKER. 

I  hereby  certify  that  the  foregoing  is  a  true  and  correct 
copy  of  the  Original  now  in  file  in  this  office. 
This  1 5th  day  of  January,  1900. 

F.  T.  F.    LOVEJOY, 

Secretary." 


344          THE  FAILURE    OF  THE  I  RON- CLAD 

It  will  be  noticed  that  Mr.  Lovejoy  simply  signed  it  in  his 
official  character  as  secretary  of  the  company.  Mr.  Curry  was  on 
his  death-bed ;  but  he  was  asked  to  sign  it  and  refused.  "  Mr. 
Frick  is  my  friend,"  said  Mr.  Curry.  "  And  am  I  not  also  your 
friend?  "  Mr.  Carnegie  asked.  "Yes;  but  Mr.  Frick  has  never 
humiliated  me,"  was  the  pathetic  answer  of  the  dying  man. 

Mr.  Henry  Phipps  not  only  refused  to  sign  the  demand,  but 
joined  Mr.  Frick  in  protesting  against  the  action  of  the  Board. 
These  protests  are  as  follows : 

To  THE  CARNEGIE  STEEL  COMPANY,  LIMITED  : 

I  have  read  a  copy  of  the  minutes  of  the  Board  of  Managers 
of  the  Carnegie  Steel  Company,  Limited,  dated  January  8th, 
1900,  handed  to  me  Friday  afternoon,  January  I2th,  1900,  and 
I  desire  particularly  to  call  your  attention  to  certain  actions  of 
the  Board  regarding  the  so-called  agreements  as  to  partners' 
interests,  dated  1887,  1892  and  1897; 

I  dissent  from  some  of  the  statements  of  alleged  facts  therein 
contained,  and  I,  certainly,  do  not  agree,  but  object  to  and  deny, 
that  the  said  action  of  the  Board  of  Managers  on  January  8th, 
1900,  and,  indeed,  any  action  of  the  Board  of  Managers,  could 
or  did  re-instate  the  so-called  agreement  of  1887. 

As  I  have  heretofore  stated,  I  am  opposed  and  object  to  any 
attempt  not  only  to  force  from  any  partner  his  interest  in  our 
Company,  but,  also,  to  the  right  of  our  Company  to  use  its 
capital  in  the  purchase  of  any  such  interest. 

HENRY  PHIPPS,  JR. 

PITTSBURGH,  January  15,  1900. 

To  THE  CARNEGIE  STEEL  COMPANY,  LIMITED. 

On  Friday  evening,  January  I2th,  1900,  for  the  first  time  I 
learned  that  the  Board  of  Managers  of  your  Company  secretly 
and  without  notice  to  me,  at  a  meeting  on  Monday,  January 
8th,  1900,  passed  a  resolution  offered  by  Andrew  Carnegie, 
rescinding  a  former  resolution  of  October  igth,  1897,  touching 
the  agreement  of  September  1st,  1897,  and  at  the  same  time 
your  Secretary  was  directed  to  procure  the  signatures  of  the 
present  members  of  the  association  who  had  not  signed  the  same 
to  what  is  now  for  the  first  time  in  your  minutes  called  "  the 
Supplemental  Iron  Clad  agreement  dated  July  ist,  1892." 


SEIZURE   OF  THE  PRICK  INTEREST        345 

This  is  to  notify  you  that  all  the  said  action  on  January  8th, 
1900,  was  taken  without  my  knowledge  or  consent  and  I  do 
hereby  protest  against  and  object  to  the  same.  In  some  re- 
spects the  recitals  or  statements  therein  contained  are  untrue 
in  fact.  The  action  did  not  and  could  not  as  the  resolution  as- 
serts, re-instate  the  so-called  agreement  of  1887.  At  the  in- 
stigation of  Andrew  Carnegie  you  now  speciously  seek  without 
my  knowledge  or  consent  and  after  a  serious  personal  disagree- 
ment between  Mr.  Carnegie  and  myself,  and  by  proceedings 
purposely  kept  secret  from  me  to  make  a  contract  for  me  under 
which  Mr.  Carnegie  thinks  he  can  unfairly  take  from  me  my 
interest  in  The  Carnegie  Steel  Company,  Limited.  Such  pro- 
ceedings are  illegal  and  fraudulent  as  against  me,  and  I  now 
give  you  formal  notice  that  I  will  hold  all  persons  pretending 
to  act  thereunder  liable  for  the  same. 

H.  C.   FRTCK. 

PITTSBURGH,  January  I3th,  1900. 

No  attention  was  paid  to  these  protests,  and  on  February  1st 
the  following  letter  was  sent  to  Mr.  Frick : 

THE  CARNEGIE  STEEL  COMPANY,  LIMITED, 
General  Offices;  Carnegie  Building, 

PITTSBURG,  PA.,  February  1st,  1900. 
Mr.  H.  C.  Frick, 
Bid  I  ding. 

DEAR  SIR  : — I  beg  to  advise  you  that  pursuant  to  the  terms 
of  the  so  called  "  Iron  Clad  Agreement "  and  at  the  request  of 
the  Board  of  Managers,  I  have  to-day  acting  as  your  attorney 
in  fact  executed  and  delivered  to  The  Carnegie  Steel  Company, 
Limited,  a  transfer  of  your  interest  in  the  capital  of  said  Com- 
pany. 

Yours  truly, 

C.  M.  SCHWAB. 

Such  is  the  interesting  story  of  the  famous  iron-clad  agree- 
ment, and  Mr.  Carnegie's  attempt  to  use  it  for  the  "ejecture" 
of  Mr.  Frick. 


CHAPTER    XXII 


THE   ATLANTIC   CITY   COMPROMISE 

,!*****»£        ONE  of  the  junior  members  of  the 
Carnegie  Steel  Company,  recently 
speaking    of    these  events,  un- 
consciously adopted  the  circus 
simile  used  by  one  of  a  former 
generation    of  partners,   else- 
where  quoted,   in  explanation 
of    the    apparent    willingness 
with    which    he    and  his    col- 
leagues joined  Carnegie  in  the 
effort  to  depose  Frick.      "  We 
were  simply  a  band  of  circus 
horses,"  he  said,  "and  we  all  jumped  as  the 
ring-master  cracked  his  whip." 

Although  several  of  the  junior  partners  protested  at  a  secret 
meeting,  only  one  of  the  well-trained  band,  besides  Curry,  openly 
shied  and  refused  to  jump  at  the  crack  of  the  ring-master's 
whip.  This  was  Secretary  Lovejoy.  Entering  the  Carnegie 
employ  in  1881  as  a  telegraph  operator,  he  had  won  his  partner- 
ship through  his  unusual  ability  as  an  accountant;  and  for 
many  years  he  had  filled  the  responsible  office  of  secretary  to 
the  entire  satisfaction  of  his  seniors.  In  particular  he  had  won 
the  confidence  of  Mr.  Frick ;  and  during  the  Homestead  strike 
had  ably  served  as  the  chairman's  chief  assistant.  Frankly  ad- 
mitting his  obligations  to  Mr.  Frick,  he  took  a  unique  position 
in  the  fight;  and  refused  to  be  cajoled  or  threatened  away  from 
the  side  of  his  chief.  He  and  Curry  were  the  only  ones  of  the 
thirty  odd  "young  geniuses  "  to  openly  deny  that  a  majority  of 

shares  necessarily  carried  with    it   a    surplus   of   wisdom    and 

6 


FRANCIS  T.  F.  LOVEJOY 


LOVEJOY'S   INDEPENDENCE  347 

equity.  He  also  accentuated  his  isolation  by  filing  a  separate 
answer  in  the  Equity  Suit,  in  which  he  advanced  in  terse  phrase- 
ology an  original  argument  against  the  validity  of  his  colleagues' 
acts. 

The  independence  thus  shown  by  Mr.  Lovejoy  greatly  facili- 
tated an  amicable  adjustment  of  the  difficulty;  for  Andrew 
Carnegie  refused  to  treat  with  Frick  in  any  way,  and  it  be- 
came necessary  for  the  latter  to  find  some  one  to  represent  him 
who  had  the  ability  to  cope  with  the  combined  forces  of  his 
opponents.  From  this  difficult  position  Lovejoy  emerged  with 
credit. 

The  first  peace  conference  was  held  at  Andrew  Carnegie's 
residence  in  New  York  on  Saturday,  March  i/th,  1900.  It 
was  attended  by  Messrs.  Carnegie,  Henry  Phipps,  Schwab,  and 
Lovejoy.  The  long-talked-of  consolidation  of  the  Carnegie 
and  Frick  companies  was  now  finally  agreed  upon;  and  the  pre- 
liminaries settled  for  a  compromise  of  the  personal  differences 
of  the  leading  partners.  Fearing  that  the  newspapers  would 
suspect  what  was  going  on  if  the  whole  Board  of  Managers  sud- 
denly appeared  in  New  York,  it  was  arranged  to  continue  the 
conference  on  Monday  at  Atlantic  City;  and  Carnegie  tele- 
graphed to  Pittsburg,  telling  the  members  of  the  Board  to  leave 
on  Sunday  night  for  the  New  Jersey  resort.  To  disarm  sus- 
picion they  were  instructed  to  take  their  wives  with  them. 

Mr.  Frick  had  remained  in  Pittsburg;  but  he  was  kept  in- 
formed of  the  progress  of  the  negotiations  over  the  telephone 
by  Mr.  Lovejoy.  He  was  satisfied  with  the  plans  outlined, 
provided  no  details  inimical  to  his  interests  were  introduced; 
and  Lovejoy  spent  most  of  the  night  drafting  the  agreement. 

On  Monday  this  agreement  was  read  to  the  assembled  board 
at  Atlantic  City.  In  general  it  was  acceptable  to  Carnegie  and 
his  adherents ;  but  one  clause  provoked  bitter  opposition  and 
jeopardized  the  whole  plan.  It  appeared  that  Carnegie  had 
registered  a  vow  never  to  recognize  Frick  as  a  partner;  and  to 
maintain  his  consistency  he  demanded  that  Frick's  interest 


343          THE  ATLANTIC   CITY  COMPROMISE 

should  not  be  given  direct  to  him,  but  through  the  hands  of  a 
trustee.  This  was  the  only  thing  in  the  agreement  that  was 
productive  of  discord;  and  concerning  it  Carnegie  displayed 
such  heat  ancl  persistence  that  Lovejoy,  rather  than  imperil  the 
settlement,  conceded  the  point. 

The  next  day  the  amended  agreement  was  adopted;  and  just 
as  the  last  signatures  were  being  affixed  Mr.  James  B.  Dill 
arrived  by  special  train  from  New  York  to  draw  up  the  new 
company's  charter.  The  same  afternoon  the  conference  ended ; 
and  Schwab  celebrated  the  conclusion  of  peace  by  a  banquet 
at  the  Bellevue  Hotel,  Philadelphia,  which  he  had  ordered  by 
telegraph. 

The  agreement  thus  reached  reads  as  follows : 

MM.  Schwab,  Carnegie,  L.  C.  Phipps,  Morrison,  Clemson, 
Gayley  and  Moreland,  representing  The  Carnegie  Steel  Com- 
pany, Limited,  and  Henry  Phipps,  representing  John  Walker 
and  others  of  the  H.  C.  Frick  Coke  Company,  agree  as  follows : 

All  the  business  of  The  Carnegie  Steel  Company,  Limited, 
and  the  H.  C.  Frick  Coke  Company  to  be  merged  substantially 
as  shown  in  paper  "A  "  of  June  3rd,  1899,  attached  hereto,  ad- 
justments to  be  made  up  to  April  1st,  1900,  which  will  bring 
the  two  concerns  into  the  same  relative  positions  as  to  book- 
values  as  they  occupied  April  1st,  1899. 

In  the  matter  of  the  dispute  between  the  two  companies  as 
to  prices  of  coke,  neither  party  shall  be  held  to  be  right  or 
wrong,  both  shall  be  considered  equally  so,  therefore  the  differ- 
ence will  be  split  in  two,  each  party  yielding  one-half  of  its 
claim. 

ANDREW  CARNEGIE. 

HENRY  PHIPPS. 

F.   T.  F.   LOVEJOY.  C.   M.    SCHWAB. 

Witness:  JAS.  BERTRAM.  L.  C.  PHIPPS. 

THOS.  MORRISON. 

JAMES  GAYLEY. 

D.  M.  CLEMSON. 

A.   M.    MORELAND. 

The  same  parties  representing  The  Carnegie  Steel  Com- 
pany, Limited,  and  F.  T.  F.  Lovejoy  representing  H.  C.  Frick, 
under  full  authority  so  to  do,  agree  as  follows : 


TREATY   OF  PEACE 


349 


The  Carnegie  Steel  Company,  Limited,  will  hand  over  to 
said  Lovejoy  Six  per  cent  of  the  Stocks  and  Securities  it  ob- 
tains under  this  merger,  said  Lovejoy  to  receipt  for  the  same  in 
full  of  all  claims  of  said  Frick  against  the  Company  or  any  of 
its  members.  To  this  receipt  the  signature  of  H.-C.  Frick  will 
also  be  appended,  and  H.  C.  Frick  will  thereupon  withdraw  his 
suit  against  the  Company.  Meanwhile  all  legal  proceedings  to 
remain  in  statu  quo. 

The  Committee  to  carry  out  the  details  of  this  Agreement 
is  to  consist  of  C.  M.  Schwab,  G.  D.  Packer,  F.  T.  F.  Lovejoy 
and  A.  M.  Moreland,  who  shall  act  by  unanimous  consent,  but 
that  failing,  all  differences  if  any  will  be  referred  to  Judge  J. 
H.  Reed,  whose  decision  shall  be  final. 

The  plans  for  carrying  out  this  Agreement  are  more  fully 
set  forth  in  paper  marked  "  B "  herewith  appended  and  made 
part  of  this  Agreement. 

We,  the  undersigned,  pledge  ourselves  to  carry  out  the  spirit 
of  this  agreement  in  good  faith  and  with  every  desire  to  bring 
it  to  a  successful  conclusion. 

L.  C.   PHIPPS. 
THOS.  MORRISON. 
JAMES  GAYLEY. 
D.  M.   CLEMSON. 
Witness :  JAS.   BERTRAM. 
F.  T.   F.  LOVEJOY. 
A.  M.  MORELAND. 


ANDREW  CARNEGIE. 

H.  PHIPPS. 

C.  M.    SCHWAB. 


STATEMENT  "A,"  SHOWING  ACCOUNTS  OF  STOCKHOLDERS 
IN  THE  CARNEGIE  STEEL  COMPANY,  LIMITED,  AND  THE 
H.  C.  FRICK  COKE  COMPANY,  AFTER  THE  ACCEPTANCE  OF 
CERTAIN  OPTIONS  ON  THE  STOCKS,  GIVEN  APRIL  24,  1899. 


Stockholders             Personal  Account. 

Value  of  C.  S.  Co., 

Value  of  H.  C.  F.  C. 

C.  S.  Co.,  Ltd. 

Ltd.  Stock. 

Co.  Stock. 

Andrew  Carnegie,    Cr.  $4,025,055.76 

$146,250,000.00 

$30,039,898.09 

Henry  Phipps,          Cr.         151,092.98 

27,500,000.00 

7,652,354.74 

H.  C.  Frick,             Cr.           50,911.89 

15,000,000.00 

16,604,529.50 

George  Lauder,        Cr.         107,487.38 

IO,OOO,OOO.OO 

1,187,237.97 

C.  M.  Schwab,         Dr.     1,168,024.90 

7,500,000.00 

618,575.66 

\V.  H.  Singer,          Cr.        358,916.61 

5,000,000.00 

773,031.18 

H.  M.  Curry,            Dr.          81,486.59 

5,000,000.00 

771,183.88 

L.  C.  Phipps,            Dr.       656,173.70 

5,000,000.00 

412,627.36 

A.  R.  Peacock,         Dr.       726,017.98 

5,000,000.00 

412,259.46 

F.  T.  F.  Lovejoy,    Dr.        110,593.76 

1,666,666.67 

138,029.63 

Thos.  Morrison,          Dr.        185,067.94 

1,666,666.67 

137,843.16 

Ceo.  IT.  Wightman,  Dr.       248,119.44 

1,666,666.67 

137,661.73 

350 


THE  ATLANTIC   CITY  COMPROMISE 


Stockholders. 

D.  M.  Clemson, 
James  Gayley, 
A.  M.  Moreland. 
Chas.  L.  Taylor, 
A.  R.  Whitney, 
W.  W.  Blackburn, 
Jno.  C.  Fleming, 
J.  Ogden  Hoffman, 
Milld.  Hunsiker, 
Geo.  E.  McCague, 
James  Scott, 
H.  P.  Bope, 
W.  E.  Corey, 
Jos.  E.  Schwab, 
L.  T.  Brown, 

D.  G.  Kerr, 
H.  J.  Lindsay, 

E.  F.  Wood, 

H.  E.  Tener,  Jr., 

Geo.  Megrew, 

G.  D.  Packer, 

W.  B.  Dickson, 

A.  C.  Case, 

John  McLeod, 

Chas.  W.  Baker, 

Undivided, 

Mrs.  L.  C.  Carnegie 

John  Walker 

Thomas  Lynch 

Vandervort  Estate. . , 
Borntraeger  Estate  . . 

G.  B.  Bosworth 

J.  G.  A.  Leishman.  , 

Robt.  Ramsay , 

John  Pontefract 
S.  L.  Schoonmaker . . 
Mrs.  C.  A.  Wilson  . . 
Miss  H.  R.  Wilson  . 
John  Walker,  Gdn. . . 
Miss  C.  B.  Wilson  . . 

JohnT.  Wilson 

Miss  E.  C.  Wilson.  , 


Dr. 
Dr. 

Dr. 
Dr. 


Personal  Account. 
C.  S.  Co..  Ltd. 

$258,754.79 

186,619.70 

233,044.75 

96,982.26 


Dr. 
Dr. 
Dr. 
Dr. 
Dr. 
Dr. 
Cr. 
Dr. 
Dr. 
Dr. 
Dr. 
Dr. 
Dr. 
Dr. 
Dr. 
Dr. 
Dr. 
Dr. 
Dr. 
Dr. 
Dr. 


29,091.29 
23,510.01 
62,231.06 

94,791.77 

108,797.58 

106,888.16 

13,285.95 

MO.577.43 

176,301.22 

107,002.79 

43,197.23 

43,197.23 

48,690.11 

48,690.11 

48,690.11 

48,690.11 

63,805.55 

63,805.55 

63,805.55 

63,805.55 

271,731.30 


Value  of  C.S.  Co., 
Ltd.  Stock. 

$1,666,666.6; 
1,527,777.78 
1,527,777.78 
I,25O,OOO.OO 
1,250,000.00 
833,333.33 
833,333.33 
833,333.33 
833,333.33 
833,333-33 
833,333.33 
277,777.78 
833,333.33 
833,333.33 
555,555-55 
277,777.78 
277,777.78 
277,777.78 
277,777.78 
277,777.78 
277,777.78 
277,777.78 
277,777.78 
277,777.78 
277,777.77 
I,25O,OOO.OO 


Value  of  H.  C.  F.  C. 
Co.  Stock. 

$137,661.73 

126,401.58 

126,220.15 

103,337-01 

102,974.15 

69,012.29 

69,012.29 

69,012.29 

69,012  29 

69,012.29 

69,012.29 

22,883.14 

68,649.43 

68,649.43 

45,766.29 

22,883.14 

22,883.14 

22,883.14 

22,883.14 

22,883.14 

22,883.14 

22,883.14 

22,883.14 

22,883.14 

22,883.14 

102,974.24 

5,0l8,026.8l 

1,434,398.29 

640,794.18 

521,794.83 

360,103.45 

355,497.51 

360,085.87 

194,355.37 

194,355.37 

194,355.37 

92,631.07 

40,166.20 

40,161.36 

40,110.99 

40,082.89 

39>425.79 


Totals  . .  .  .  Dr. 


$901,434.95  $250,000,000.00    $70,000,000.00 


Interest  adjusted  to  June  i,  1899. 
Pittsburg,  June  3,  1899. 


CONSOLIDATION  AT  LAST  351 

MEMORANDUM  "  B,"  covering  details  agreed  upon  at  Atlantic 
City  this  iQth  March,  1900,  by  each  and  every  of  the  persons 
whose  names  are  attached  hereto;  each  agreeing  with  the  others 
that  he  will  do  all  in  his  power  in  good  faith  to  carry  out  this 
agreement  and  to  induce  every  other  Stockholder  in  the  Com- 
panies named  to  join  in  this  agreement,  being  convinced  that  it 
will  be  for  the  best  interests  of  all  concerned : 

The  business  of  The  Carnegie  Steel  Company,  Limited,  the 
H.  C.  Frick  Coke  Company,  and  all  the  Companies  subsidiary 
to  each,  cr  either,  to  be  consolidated,  thus : 

All  of  the  lands,  works  and  other  properties  now  owned  and 
operated  by  The  Carnegie  Steel  Company,  Limited,  to  be  sold 
and  transferred  to  the  Carnegie  Steel  Company,  an  existing 
Pennsylvania  Corporation,  saving  and  excepting  the  Stocks  held 
by  it  in  certain  other  Corporations,  to  wit,  the  H.  C.  Frick 
Coke  Company,  with  all  its  subsidiary  Companies,  the  Oliver 
Iron  Mining  Company,  the  Union  Railroad  Co.,  the  Pittsburg, 
Bessemer  &  Lake  Erie  R.  R.  Co.,  and  all  Stocks  in  other  Com- 
panies, now  held  by  The  Carnegie  Steel  Company,  Limited, 
which  are  considered  permanent  investments  and  not  merely 
securities ;  payment  therefor  to  be  made  in  Stock  of  the  Car- 
negie Steel  Company,  the  Capital  whereof  shall  be  increased  to 
($50,000,000)  Fifty  Million  Dollars. 

The  Stock  now  held  by  The  Carnegie  Steel  Company,  Lim- 
ited, in  the  H.  C.  Frick  Coke  Company,  the  Youghiogheny 
Northern  Railway  Co.,  the  Youghiogheny  Water  Co.,  the  Mt. 
Pleasant  Water  Co.,  and  the  Trotter  Water  Co.,  to  be  distrib- 
uted among  the  Shareholders  of  The  Carnegie  Steel  Company, 
Limited,  in  proportion  to  their  several  interests,  said  Share- 
holders to  be  charged  for  said  Stocks  at  their  respective  book 
values  as  at  April  ist,  1900. 

ANDREW  CARNEGIE. 
F.  T.  F.  LOVEJOY.  HENRY  PHIPPS. 

CHARLES  M.    SCHWAB. 

LAWRENCE  C.   PHIPPS. 

THOMAS  MORRISON. 

JAMES  GAYLEY. 

DAVID  M.   CLEMSON. 

ANDREW  M.  MORELAND. 

A  Corporation  to  be  formed  under  the  laws  of  New  Jersey, 
having  the  name  and  title  The  Carnegie  Company,  with  $160,- 
000,000  Capital  Stock,  which  Company  shall  acquire  all  the 
stock  of  the  Carnegie  Steel  Company,  the  H.  C.  Frick  Coke 


352          THE  ATLANTIC   CITY  COMPROMISE 

Co.,  all  their  subsidiary  Companies,  and  the  Stocks  of  all  other 
Companies  now  held  by  The  Carnegie  Steel  Company,  Limited, 
which  are  held  as  investments;  by  purchase,  paying  to  the 
Stockholders  therefor  as  follows : 

For  all  of  the  Stock  in  the  Carnegie  Steel  Company,  and  for 
all  of  the  Stocks  now  held  by  The  Carnegie  Steel  Company, 
Limited,  saving  and  excepting  the  Stocks  held  by  it  in  the  H. 
C.  Frick  Coke  Co.,  the  Youghiogheny  Northern  Rly.  Co.,  the 
Youghiogheny  Water  Co.,  the  Mt.  Pleasant  Water  Co.,  and  the 
Trotter  Water  Co.,  One  hundred  and  twenty-five  million  dollars 
in  Stock  of  The  Carnegie  Company  and  a  like  amount  in  Bonds 
of  said  Company,  as  hereinafter  described  : 

For  all  of  the  Stock  in  the  H.  C.  Frick  Coke  Co.,  the 
Youghiogheny  Northern  Rly.  Co.,  the  Youghiogheny  Water 
Co.,  the  Mt.  Pleasant  Water  Co.,  the  Trotter  Water  Co.,  and 
the  Union  Supply  Co.,  Limited;  Thirty-five  million  dollars  in 
Stock  of  The  Carnegie  Company,  and  a  like  amount  in  Bonds 
of  said  Company,  as  hereinafter  described. 

Preliminary  to  the  foregoing,  adjustments  shall  be  made  as 
follows : 

A  Dividend  shall  be  declared  by  The  Carnegie  Steel  Com- 
pany, Limited,  of  such  amount  as  shall  be  necessary  to  make 
the  "  Book  Values  "  of  the  Stocks  of  The  Carnegie  Steel  Com- 
pany, Limited,  (exclusive  of  its  holdings  in  the  H.  C.  Frick 
Coke  Co.  and  its  subsidiary  Companies)  on  the  one  hand,  and 
of  the  H.  C.  Frick  Coke  Company  and  all  its  subsidiary  Com- 
panies on  the  other,  relatively  the  same  on  April  ist,  1900,  as 
they  were  on  April  ist,  1899,  when  the  values  of  $250,000,000 
and  $70,000,000,  respectively,  were  first  established. 

After  The  Carnegie  Steel  Company,  Limited,  shall  have 
distributed  among  its  shareholders  its  holdings  of  Stock  in  the 
H.  C.  Frick  Coke  Co.  and  its  subsidiary  Companies,  adjust- 
ments shall  be  made  between  all  the  Stockholders  in  the  H.  C. 
Frick  Coke  Co.,  so  that  each  shall  hold  his  proper  and  propor- 
tionate amount  of  Stock  in  the  subsidiary  Companies;  such 
adjustments  to  be  made  at  the  respective  "  Book-values,"  April 
ist,  1900,  of  the  said  Stocks. 

The  Bonds  to  be  issuea  by  The  Carnegie  Company  shall  be 
in  such  form  as  shall  be  agreed  upon  by  the  Committee  herein- 
after named,  under  the  directions  of  the  General  Counsel,  and 
shall  embody  the  following : 

Bonds  payable  in  One  hundred  years;  interest  payable  in 
New  York,  semi-annually,  at  five  per  cent  per  annum,  free  of 
all  Tax;  to  be  in  such  amounts,  $1,000,  $5,000  and  $10,000, 


THE   CARNEGIE   COMPANY  353 

as  may  be  found  best;  to  be  divided  into  four  series  of  $40,- 
000,000  each  so  as  to  make  interest  fall  due  February  1st  and 
August  ist;  March  ist  and  September  ist,  May  ist  and  No- 
vember ist,  June  ist  and  December  ist  of  each  year;  secured 
by  a  Mortgage  or  Deed  of  Trust  covering  all  the  Stocks  held 
by  The  Carnegie  Company  in  all  the  subsidiary  or  operating 
Companies ;  after  Five  years  a  Sinking  Fund  of  one-half  of  one 
per  cent,  on  said  Bonds  to  be  established ;  Bonds  to  be  subject 
to  be  drawn  for  redemption  out  of  Sinking  Fund  at  any  time  at 
1.05  after  five  years.  In  case  of  default  in  the  payment  of 
interest,  the  principal  may  become  due  and  payable.  No  per- 
sonal liability  on  Bonds;  to  be  registered  or  not,  at  holder's 
option;  with  such  other  provisions  as  are  usual  or  advised  by 
counsel  for  the  proper  protection  of  the  Bondholders. 

Each  Stockholder  in  The  Carnegie  Company  whose  interest 
has  not  been  fully  paid  up  shall  have  the  right  and  privilege  at 
his  option,  of  selling  to  The  Carnegie  Company,  at  par,  suffi- 
cient of  his  Bonds  to  liquidate  his  indebtedness,  or  of  deposit- 
ing as  collateral  security  for  such  indebtedness,  Bonds  or  Stock 
of  The  Carnegie  Company  in  proportion  to  his  indebtedness; 
three  times  in  Stock  or  one  and  one-half  times  in  Bonds,  at  his 
option. 

Stock  in  The  Carnegie  Company  shall  be  reserved  to  the 
amount  of  $3,200,000  for  the  purpose  of  selling  interests  in 
said  Company  to  deserving  officials  and  employees,  carrying  out 
the  plan  heretofore  established  by  Carnegie  Brothers  and  Co., 
Ltd.,  which  is  declared  to  be  an  essential  feature  of  the  new 
Company. 

Signed  in  duplicate;  one  copy  being  intrusted  to  A.  M. 
Moreland,  Secretary  of  The  Carnegie  Steel  Company,  Limited, 
and  the  other  copy  to  F.  T.  F.  Love  joy. 

ANDREW  CARNEGIE. 
HENRY  PHIPPS. 

C.  M.    SCHWAB. 
L.  C.   PHIPPS. 
THOS.   MORRISON. 
JAMES  GAYLEY. 

D.  M.   CLEMSON. 
A.  M.  MORELAND. 
F.  T.  F.  LOVEJOY. 

Witness:  JAS.  BERTRAM. 

We,  the  undersigned,  Shareholders  in  The  Carnegie  Steel 
Company,  Limited,  having  read  the  foregoing  Agreement,  do 
23 


354          THE   ATLANTIC   CITY  COMPROMISE 

now  hereby,  by  the  signing  hereof,  fully  approve  the  arrange- 
ment and  join  in  the  same  as  to  our  interest. 

GEORGE  LAUDER, 

pr.  ANDREW  CARNEGIE. 

GIBSON  D.    PACKER. 

We,  the  undersigned,  Stockholders  in  the  H.  C.  Frick  Coke 
Company,  having  read  the  foregoing  Agreement,  do  now  here- 
by, by  the  signing  hereof,  fully  approve  the  arrangement  and 
join  in  the  same  as  to  our  interest. 

MRS.   LUCY  C.    CARNEGIE,    Ex. 

by  ANDREW  CARNEGIE. 

Five  days  after  the  signing  of  this  agreement  a  charter  was 
'  obtained  of  the  State  of  New  Jersey,  incorporating  the  Carne- 
i  gie  Company  for  the  purpose  of  acquiring  all  the  stock  of  the 
Carnegie  Steel  Company,  the  H.  C.  Frick  Coke  Company,  all 
their  subsidiary  companies,  and  the  stocks  of  all  companies 
hitherto  held  by  the  Carnegie  Steel  Company.  It  is  worth 
noticing  that  the  committee  charged  with  the  carrying  out  of 
the  agreement  ignored  that  part  of  it  which,  at  the  instance  of 
Mr.  Carnegie,  excluded  Mr.  Frick  ;  and  his  name  appeared  third 
on  the  list  of  incorporators  of  the  new  company,  as  a  subscriber 
for  15,484  shares. 

On  March  3Oth  the  committee  made  its  report  concerning 
the  adjustment  of  the  relative  book  values  of  the  two  merging 
companies  as  follows : 

PITTSBURG,  PA.,  March  30,  1900. 

To  THE  BOARD  OF  MANAGERS  OF 

THE  CARNEGIE  STEEL  COMPANY,   LIMITED. 

The  Committee  appointed  by  the  Shareholders  of  The  Car- 
negie Steel  Company,  Limited,  and  the  H.  C.  Frick  Coke  Com- 
pany, for  the  purpose  of  carrying  out  the  plans  of  Re- Organiza- 
tion of  the  Carnegie  Interests,  beg  leave  to  report : 

In  the  matter  of  the  adjustment  of  the  relative  Book  Values 
of  The  Carnegie  Steel  Company,  Limited,  and  the  H.  C.  Frick 
Coke  Company  with  its  subsidiary  Companies : 


AN  88  PER    CENT.   DIVIDEND  355 

At  April   ist,  1899,  the  relative  Book  Values  were  as  fol- 
lows : 

The  Carnegie  Steel  Company,  Limited  ....    3.27986 
H.   C.  Frick  Coke  Company  and  Allies.  ...    I. 

Based  on  careful  estimates  of  March  Profits 
of  all  the  Companies  whose  Stock  is  included, 
the  same  relative  Book  Values,  at  April  i,  1900, 
show  a  surplus  for  distribution  to  Shareholders 
of  The  Carnegie  Steel  Company,  Limited,  of.  .$16,277,464.69 

To  this  should  be  added  the  holdings  of  The 
Carnegie  Steel  Company,  Limited,  in  the  Stock 
of  the  H.  C.  Frick  Coke  Company  and  its  sub- 
sidiary Companies,  carried  on  the  Steel  Com- 
pany's books  at 5*585,174.39 


Total  for  distribution $21,862,639.08 

This  Committee  would,  therefore,  recommend  the  declaring 
by  The  Carnegie  Steel  Company,  Limited,  of  a  final  Dividend 
of  88%  or  $22,000,000.00,  payable  as  follows : 

To  cover  the  Value  of  the  Stock  of  the  H. 
C.  Frick  Coke  Company  and  its  subsidiary  Com- 
panies charged  to  Partners  in  accordance  with 
the  Re- Organization  Agreement $5,5^5>I74-39 

3/£>>  payable  in  Cash  on  demand  by  either 
"  Paid-up  "  Partners  or  "  Debtor  "  Partners  whose 
interests  were  purchased  not  later  than  January 
i,  1899 750,000.00 

Balance  payable  at  such  times  and  in  such  in- 
stalments as  this  Committee  shall  decide  after 
consultation  with  the  principal  Partners  and  the 
Treasurer 1 5,664,825.61 


Total $22,000,000.00 

Respectfully  submitted, 

C.  M.  SCHWAB.     . 
G.  D.  PACKER. 
F.  T.  F.  LOVEJOY. 
A.  M.  MOREL  AND. 


356 


THE  ATLANTIC   CITY  COMPROMISE 


The  following  is  a  correct  list  of  stockholders  and  bond- 
holders of  the  Carnegie  Company,  as  formed  or  organized  after 
the  Frick- Carnegie  suit : 

Capital $160,000,000.00 

Bonds $160,000,000.00 

Par  Value  of  Stock,  $1,000.00  per  Share. 

Shares  of  Stock.  Bonds. 

Andrew  Carnegie 86,382  $88,147,000 

Henry  Phipps 17,227  17,577,000 

Henry  C.  Frick 15,484  15,800,000 

George  Lauder 5,482  5,593,ooo 

Charles  M.  Schwab 3,980  4,061,000 

Henry  M.  Curry 2,829  2,886,000 

•William  H.  Singer 2,830  2,886,000 

Lawrence  C.  Phipps 2,654  2,707,000 

Alexander  R.  Peacock 2,653  2,707,000 

Lucy  C.  Carnegie 2,459  2,510,000 

Francis  T.  F.  Lovejoy 884  902,000 

James  Gayley 885  902,000 

Thomas  Morrison 885  902,000 

Andrew  M.  Moreland 885  902,000 

Daniel  M.  Clemson 885  902,000 

George  H.  Wightman 884  902,000 

John  Walker 722  737,ooo 

Charles  L.  Taylor 663  677,000 

Alfred  R.  Whitney 663  677,000 

John  C.  Fleming 442  451,000 

William  W.  Blackburn :..  442  451,000 

J.  Ogden  Hoffman 442  451,000 

Millard  Hunsiker 442  451,000 

George  E.  McCague 442  451,000 

James  Scott 442  451,000 

William  E.  Corey 442  451,000 

Joseph  E.  Schwab 442  451,000 

Thomas  Lynch 317  323,000 

Henry  P.  Bope 295  301,000 

Lewis  T.  Brown 295  301,000 

Robert  T.  Vandervort 255  260,000 

John  B.  Jackson 176  179,000 

John  G.  A.  Leishman 176  179,000 

Giles  B.  Bos  worth 176  179,000 

David  G.  Kerr 147  150,000 

Homer  J.  Lindsay 147  150,000 

Ezra  F.  Wood 147  150,000 

Hampden  E.  Tener,  Jr 147  150,000 

George  Megrew 147  150,000 

Gibson  D.  Packer 147  150,000 

William  B.  Dickson 147  150,000 


THE    CARNEGIE    VETERANS 


357 


Shares  of  Stock. 

Albert  C.  Case 147 

John  McLeod 147 

Charles  W.  Baker 147 

Janet  E.  Ramsay 95 

John  Pontefract 95 

Sylvanus  L.  Schoonmaker 95 

Azor  R.  Hunt 74 

Alva  C.  Dinkey 74 

P.  Toesten  Berg 74 

Charles  McCreery 74 

Caroline  A.  Wilson  .   45 

Helen  R.  Wilson 19 

Clara  B.  Wilson 19 

John  T.  Wilson 19 

Edna  C.  Wilson 19 

James  G.  Hunter 19 

Emil  Swenson 19 

James  J.  Campbell 19 

Frederic  H.  Kindl 19 

James  B.  Dill I 

Andrew  M.  Moreland,  Trustee 3,l%9 


Bonds. 

$150,000 
150,000 
150,000 
97,000 
97,000 
97,000 
75,000 
75,000 
75,000 
75,000 
46,000 

20,000 
2O,OOO 
20,000 
2O,OOO 
19,000 
I9,OOO 
19,000 
Ig.OOO 


Total 160,000 


$160,000,000 


Thus  was  reached  the  final  metamorphosis  of  the  Carnegie 
Steel  Company.  In  the  new  organization  Mr.  Frick  was 
omitted  from  the  directorate,  as  was  also  Mr.  Carnegie.  Mr. 
Lovejoy  was  also  dropped.  But  outwardly  peace  prevailed; 
and  the  only  remaining  trace  of  a  past  conflict  is  the  Society 
of  Carnegie  Veterans,  formed  of  the  loyal  band  of  Carnegie 
adherents.  No  former  partner  is  eligible  for  membership 
in  this  association  who  did  not  take  part  in  the  attempt  to  de- 
pose Mr.  Frick.  Once  a  year  these  young  geniuses  hold  a  ban- 
quet ;  and,  amid  palms  and  electric  mottoes  to  the  glory  of  him 
who  made  them  rich,  recount  their  battles  and  congratulate  each 
other  on  the  outcome  of  their  victory.  And  the  dear  departed 
shades  of  Kloman,  Shinn,  Coleman,  T.  M.  Carnegie,  Stewart^ 
Curry,  and  others  long  forgotten,  would  listen  in  vain  for  a  word 
of  recognition  of  their  share  in  these  triumphs. 


CHAPTER    XXIII 
THE    BILLION-DOLLAR   FINALE 

THE  absorption  of  the  Carnegie  Company  by 
the  United  States  Steel  Corporation  has  been 
invested  with  much  dignity  and  lofty  cir- 
cumstance  by  numerous  writers  in  reviews 
and  magazines  ;  and  owing  to  its  magnitude, 
running  into  hundreds  of  millions,  the 
transaction  has  struck  the  popular  imagina- 
tion and  acquired  a  world-wide  interest.  To  those  who  watched 
the  incident  from  the  inside,  who  saw  the  framework  of  the 
scenery  and  the  elaborate  mechanism  of  the  stage  effects,  who 
attended  the  rehearsals  and  heard  the  subdued  tones  of  the 
prompter,  there  was  a  certain  grim  humor  in  a  performance 
which  those  in  front  watched  with  bated  breath.  But  despite 
its  lack  of  spontaneity,  the  proceeding  had  the  dignity  con- 
ferred by  magnitude;  and  its  brilliant  success  made  it  impres- 
sive even  to  those  who  heard  the  creaking  of  the  machinery. 

The  time  is  not  yet  ripe  for  a  full  and  frank  description  of 
the  events  leading  up  to  this  important  consolidation ;  but  a 
rough  outline  of  them  may  be  given. 

About  a  year  before  Mr.  Frick  resigned  the  headship  of  the 
Carnegie  Steel  Company  he  appointed  a  committee,  with  Mr. 
Clemson  as  chairman,  to  report  on  a  project  he  had  formed  of 
building  a  tube  works  at  Conneaut,  the  Lake  Erie  terminus  of 
the  Bessemer  Railroad.  There  being  little  freight  from  Pitts- 
burg  to  the  Lake  port,  the  ore  trains  returned  for  the  most  part 
empty ;  and  to  utilize  this  profitless  haul,  various  plans  had 
been  discussed  by  Mr.  Frick  and  his  colleagues  for  the  build- 
ing of  blast-furnaces  and  other  works  at  Conneaut  that  would 

358 


PICKWICKIAN  HUMOR  359 

call  for  Pittsburg  coal  and  coke.  One  of  these  schemes  is  out- 
lined in  the  minutes  of  the  meeting  of  the  Board  of  Managers 
held  on  January  i6th,  1899,  previously  quoted;  and  at  the  same 
meeting  Mr.  Clemson  made  a  remark  which  showed  that,  after 
making  the  investigation  authorized  by  Mr.  Frick,  he  was  in 
favor  of  also  starting  the  tube  works. 

It  is  probable  that  these  works  would  have  been  built  by  the 
Carnegie  managers  but  for  the  attempt  made  the  same  year  to 
sell  out  to  the  Moore  Syndicate ;  it  being  thought  undesirable 
to  antagonize,  while  such  a  deal  was  pending,  the  important  finan- 
ciers who  were  interested  in  the  National  Tube  Company,  with 
which  the  new  works  would  have  come  into  competition.  But 
there  was  no  idea,  at  this  time,  of  holding  the  tube  project  as  a 
threat  over  anybody.  It  was  a  simple  business  plan  growing 
out  of  the  need  for  filling  the  empty  ore-cars  on  their  return  to 
Conneaut. 

After  the  reorganization  of  the  steel  company  consequent 
on  the  withdrawal  of  Mr.  Frick,  it  was  seen  by  Mr.  Carnegie 
that  this  tube  project  might  be  revived  and  utilized  to  force 
the  purchase  of  at  least  his  own  holdings  in  the  Carnegie 
Company,  and  perhaps  of  the  whole  concern.  So  the  plan  was 
gone  over  afresh,  amplified  and  made  definite,  and  then  given 
to  the  newspapers  by  the  Carnegie  press  agent  and  by  Carnegie 
interviews.  Thus  it  was  published  the  length  and  breadth  of 
the  country  as  the  settled  purpose  of  the  steel  company.  Here 
are  two  of  these  statements :  the  first  as  furnished  by  the  Car- 
negie press  agent,  and  the  second  in  a  characteristic  interview 
with  Andrew  Carnegie.  The  Pickwickian  humor  of  the  latter 
will  not  be  lost  on  the  reader  who  recalls  the  discussion  of  the 
Carnegie  managers  in  1899  concerning  the  Conneaut  project, 
quoted  in  the  eighteenth  chapter  of  this  book. 

"  It  has  been  determined  by  the  Carnegie  Company,  in  order 
to  utilize  this  now  profitless  haul,  to  establish  at  the  lake  ter- 
minal, where  it  already  owns  great  docks  and  has  ample  facilities 
for  handling  ore  and  for  the  lake  shipment  of  the  finished  prod- 


36o  THE  BILLION-DOLLAR   FINALE 

uct,  an  extensive  pipe  and  tube  manufacturing  plant,  represent- 
ing an  investment  of  $12,000,000.  The  projected  works  will 
stretch  over  a  mile  along  the  lake  front,  and  will  be  the  most 
extensive  and  complete  plant  of  the  kind  in  existence.  Electric 
power  will  be  mainly  used  for  driving  the  machinery,  and  the 
system  of  operation  will  be  continuous,  the  ore  being  unloaded 
from  vessels  at  one  end  and  worked  through  successive  stages 
of  iron  and  steel-making  in  a  direct  line  to  the  finished  pipe 
and  tube  at  the  other  end." —  World's  Work. 

"  Immediately  following  the  Carnegie  Company  announce- 
ment of  the  location  of  a  tube  plant  at  Conneaut  Harlpor,  Ohio, 
rumors  were  set  afloat  throwing  some  doubt  on  the  sincerity  of 
the  company's  intention  to  carry  out  the  announced  plans.  In 
the  iron  trade  there  was  an  attempt  to  find  a  reason  for  the  loca- 
tion of  the  plant  at  Conneaut  rather  than  in  the  Pittsburg  dis- 
trict. Regarding  the  reasons  for  going  outside  of  the  Pittsburg 
district  Andrew  Carnegie  was  quoted  last  week  as  follows:  'In 
fhe  first  place  I  am  bound  to  say  that  Conneaut  was  not  con- 
sidered until  the  Pennsylvania  Railroad,  without  consulting, 
doubled  our  export  rates  .  .  .  which  led  our  people  to  take  up 
the  question :  How  can  we  escape  from  the  grasp  of  this  arbi- 
trary railroad  combination?  A  study  of  the  subject  convinced 
every  one  that  we  could  do  so  by  taking  to  water.  When  I  re- 
turned from  Europe  it  was  to  find  all  agreed  that  this  was  the 
method  of  relief.  .  .  .  Our  establishment  at  Conneaut  will 
benefit  Pittsburg,  because  we  shall  give  the  Pittsburg  railroads 
an  object  lesson.  A  very  small  proportion  of  our  freight  will 
go  by  rail  from  these  works.  We  are  already  in  the  shipping 
business,  and  have  only  to  add  half  a  dozen  small  steamers  to 
our  fleet  to  ply  to  the  important  lake  cities,  distributing  steel 
and  loading  up  with  scrap,  of  which  we  shall  use  an  enormous 
quantity. '  .  .  . 

Asked  whether  the  proposed  plant  was  supposed  to  be  a 
blow  at  the  National  Tube  Co.,  Mr.  Carnegie  replied  that  at 
one  time  the  original  National  Company  purchased  billets  from 
his  company,  but  later  decided  to  work  its  own  blast  furnaces 
and  make  its  own  billets.  Continuing  he  said :  '  As  I  under- 
stand the  policy  of  the  Carnegie  Steel  Co.,  it  is  to  co-operate  in 
every  way  with  its  fellow  manufacturers  in  the  industrial  world, 
and  not  to  push  itself  into  any  new  field  save  in  self-defence. 
We  did  not  leave  the  National  Tube  Co.  They  left  us,  which 
they  had  a  perfect  right  to  do,  of  course.  Now  we  are  ready  to 
shake  hands  and  co-operate  with  them  in  the  most  friendly 


CONVERTING    THE  FINANCIERS 


361 


"In  the  conversion  of  the  heathen.' 


spirit.  We  are  better  for  them  than  a  dozen  small  concerns, 
conducted  in  a  small,  jealous  way.  We  believe  there  is  room 
enough  for  the  two  concerns," 
etc. — Iron  Trade  Review,  Janu- 
ary I /th,  1901. 

In  the  conversion  of  the 
heathen,  missionaries  have 
found  it  useful  to  describe 
the  condition  of  the 
damned  before  presenting 
a  picture  of  the  joys  of  the 
blessed.  It  was  on  some 
such  principle  that  the 
threat  of  industrial  war  was 
thus  made  by  the  Carnegies 
before  the  blessings  of  co- 
operation and  consolidation 
were  set  out  before  the  vision 
of  the  alarmed  financiers  of  the  country.  The  panic  produced 
by  the  double  threat  of  the  Carnegies  to  build  a  rival  tube  works 
and  to  enter  into  competition  with  the  great  Pennsylvania  Rail- 
road has  been  graphically  described  by  a  recent  magazine  writer : 

"  Either  project  as  a  threat  would  have  been  alarming.  The 
two  together  as  imminent  and  assured  accomplishments  pro- 
duced a  panic.  And  a  panic  among  millionaires,  while  hard  to 
produce  is,  when  once  under  way,  just  as  much  of  a  panic  as  is 
a  panic  among  geese.  They  ran  this  way  and  that;  they  hid 
one  behind  another;  they  filled  the  newspapers  with  their 
squawkings ;  they  reproached,  implored,  accused  each  other. 
At  last  they  ran  to  their  master — Morgan.  And  he  negotiated 
with  Carnegie." 

But  the  negotiations  came  later.  They  were  preceded  by  a 
bankers'  dinner,  at  which  were  preached  the  joys  of  industrial 
peace.  This  famous  dinner  also  grew  out  of  a  previous  inci- 
dent connected  with  Mr.  Frick. 

Somewhere  about  the  time  of  the  purchase  of  the  Moore 


362  THE  BILLION-DOLLAR   FINALE 

option,  Mr.  Frick  invited  a  number  of  prominent  bankers  to 
Pittsburg,  to  show  them  the  armor-plate  vault  that  had  just 
been  built  for  the  Union  Trust  Company.  Incidentally  they 
were  given  an  opportunity  of  seeing  the  extent  of  the  iron  and 
steel  works  at  Pittsburg.  Up  to  that  time  the  resources  of  the 
Iron  City  were  but  imperfectly  known  in  Wall  Street.  This 
visit  showed  that  it  was  the  busiest  place  in  the  world,  and  the 
centre  of  its  greatest  industry.  Duly  impressed,  the  bankers  re- 
turned to  New  York ;  and  the  courtesies  they  had  received  as 
Mr.  Prick's  guests  were  now  treated  as  an  outstanding  asset  of 
the  Carnegie  Steel  Company.  Through  the  influence  of  Mr. 
Albert  C.  Case,  credit  agent  of  the  Carnegie  Company,  and  that 
of  Mr.  Charles  Stewart  Smith,  an  intimate  friend  of  Andrew 
Carnegie,  arrangements  were  made  with  a  prominent  banker  of 
New  York,  who  had  been  among  those  entertained  by  Mr. 
Frick,  to  give  a  return  dinner,  ostensibly  in  honor  of  Mr. 
Schwab.  This  dinner  was  duly  given ;  and,  as  a  spontaneous 
outburst  of  enthusiasm  for  Mr.  Prick's  earlier  protege,  it  has 
been  much  written  about  and  discussed. 

Mr.  Morgan  attended  the  dinner,  and  listened  with  great 
interest  to  Mr.  Schwab's  views  on  industrial  combinations — 
"  views  apparently  so  large,  so  wise,  and  so  interesting  that  Mr. 
Morgan  was  strongly  impressed  by  the  speech  and  the  speaker. 
Then  there  began  a  series  of  interviews  which  eventually  led 
to  the  founding  of  the  United  States  Steel  Corporation,  to  the 
realization  of  Mr.  Carnegie's  desire  to  retire  from  the  control 
of  the  business,"*  and  to  the  sale  and  absorption  of  the  Carne- 
gie Company.  It  was  the  most  masterly  piece  of  diplomacy  in 
the  history  of  American  industry,  and  formed  a  fitting  climax 
to  Andrew  Carnegie's  romantic  business  career. 

The  further  story  of  the  merger  has  been  told  a  hundred 
times  and  need  not  be  repeated  here.  The  part  of  the  Carne- 
gies  in  it  is  indicated  in  the  following  letter  to  stockholders, 
now  first  published : 

*  Prof.  Henry  Loomis  Nelson. 


STORY  OF   THE   MERGER  363 

THE    CARNEGIE    COMPANY 

Offices;  Carnegie  Building, 

Pittsburg,  Pa.,  qth  March,  iqoi. 

Personal  and  Confidential. 
DEAR  SIR: 

To  facilitate  the  exchange  of  the  Stock  of  The  Carnegie 
Company  for  Stock  of  the  United  States  Steel  Corporation,  the 
undersigned,  at  the  request  of  a  majority  of  the  Stockholders, 
have  agreed  to  act  as  a  Committee,  on  behalf  of  their  Fellow 
Stockholders,  to  receive  Certificates  of  Stock  of  The  Carnegie 
Company,  and  to  make  the  exchange  for  shares  of  Preferred  and 
Common  Stock  of  the  new  Company. 

You  are  therefore  requested,  if  you  desire  to  exchange  your 
stock  and  to  have  this  Committee  act  for  you,  to  deliver  the 
Certificates  of  Stock  of  The  Carnegie  Company  held  by  you,  to 
W.  W.  Blackburn,  who  will  deliver  to  you  the  receipt  of  the 
Committee  therefor.  Such  Certificates  must  be  endorsed  in 
blank  (or  may  be  accompanied  by  separate  powers  of  attorney), 
with  the  names  of  the  undersigned  inserted  as  attorneys  in  fact, 
with  power  to  them  or  any  two  of  them  to  transfer  the  sait! 
Shares  upon  the  books  of  the  Company  ;  proper  revenue  stamps 
to  be  attached.  The  receipt  appended  hereto  will  then  be 
signed. 

The  basis  of  exchange  is  as  follows  : 

One  share  of  the  Carnegie  Company  stock  (par  value 
$1,000)  to  receive  of  the  United  States  Steel  Corporation 
Stock  15.3558  Shares  of  Seven  Per  Cent.  Cumulative  Pre- 
ferred, par  value  $100  —  $1,535.58;  14.1061  Shares  Common, 
par  value  $100  —  $1,410.61.  No  scrip  will  be  issued  for  frac- 
tional Shares,  but  exchange  will  be  arranged  at  the  rate  of  $100 
per  Share  for  Preferred  and  $50  per  Share  for  Common,  viz.  : 

Where  a  depositor  is  entitled  to  less  than  one-half  of  one 
Share  of  Preferred  or  Common  Stock,  he  will  receive  cash  for 
same  ;  and  where  entitled  to  more  than  one-half  of  one  Share 
of  Preferred  or  Common  Stock,  he  will  be  allotted  and  required 
to  pay  for  the  fractional  Share  at  the  above  rate. 

A  deposit  of  Stock  with  the  Committee  will  constitute  an 
acceptance  of  the  above  terms  by  the  depositor. 
Yours  respectfully, 

C.  M.  SCHWAB,          ) 

L.  C.  PHIPPS,  v  Committee. 


W.  W.  BLACKBURN 


v 
,  ) 


364  THE  BILLION-DOLLAR   FINALE 

Had  all  the  stockholders  been  subject  to  these  terms  it 
would  have  meant  that  the  $160,000,000  of  the  Carnegie  Com- 
pany's stock  would  have  been  exchanged  for  the  United  States 
Steel  Company's  stock  as  follows : 

Seven  per  cent,  cumulative  preferred $240,569,280 

Common  stock 225,697,760 


$466,267,040 
Add  $160,000,000  bonds  exchanged  for  the  same 

amount  of  Carnegie  bonds 160,000,000 

Total $626,267,040 

As  a  matter  of  fact,  however,  Andrew  Carnegie,  Mrs.  Lucy 
C.  Carnegie,  and  George  Lauder  were  paid  entirely  in  United 
States  Steel  Company  bonds,  at  the  rate  of  $1,500  per  share. 
Thus  for  96,000  shares  of  stock  in  the  Carnegie  Company  they 
received  $144,000,000  in  bonds  of  the  United  States  Steel  Cor- 
poration. The  balance  of  the  $304,000,000  bond  issue  of  the 
latter,  or  $160,000,000,  was  exchanged  at  par  for  the  $160,000,  - 
ooo  bond  issue  of  the  Carnegie  Company. 

For  the  balance  of  the  stock  of  the  Carnegie  Company,  i.e., 
64,000  shares,  was  issued  $98,277,120  in  preferred  stock  and 
$90,279,040  in  the  common  stock  of  the  United  States  Steel 
Corporation. 

At  the  time  of  purchase  the  bonds  and  the  preferred  stock 
were  considered  worth  par  and  the  common  stock  50 ;  making 
the  total  amount  paid  at  that  time  $447,416,640.  Add  to  this 
the  $22,000,000  dividend  paid  to  Carnegie  stockholders  the 
previous  year  in  adjustment  of  values  in  the  consolidation  of 
the  coke  and  steel  properties,  and  we  reach  the  total  cash 
value  of  the  business  to  which  Kloman's  little  forge  had  grown 
in  forty  years. 

THE    END. 


APPENDIX 

THE     E  Q^U  I  T  Y    SUIT 

So  me  extracts  from  the  pleadings  of  Henry  C.  Frick 

ON  the  1 4th  day  of  January,  1889,  your  orator  was  elected  chairman 
of  Carnegie  Brothers  &  Co.,  Limited,  and  continued  to  act  as  such  chairman 
until  the  new  association  of  the  Carnegie  Steel  Company,  Limited,  was 
formed.  He  was  then  elected  chairman  of  the  latter,  and  continued  to  act 
as  such  until  December  5th,  1899. 

On  January  nth,  1895,  with  the  assent  of  those  interested  and  with  a 
view  to  enable  your  orator  to  perform  duties  which  were  believed  to  be  of 
more  value  to  the  firm  than  those  then  imposed  upon  said  chairman,  the 
office  of  president  was  created.  Upon  said  officer  was  placed  the  details 
of  the  duties  your  orator  had  theretofore  performed  as  chairman. 

Your  orator  continued  as  chairman  with  general  supervisory  power 
until  December  5th,  1899.  About  that  date  Carnegie  without  reason,  and 
actuated  by  malevolent  motives,  demanded  his  resignation  of  said  position. 
Recognizing  Carnegie's  paramount  influence  as  the  holder  of  a  majority 
interest,  and  desiring  to  prevent  the  evil  which  might  result  from  discord, 
your  orator  acquiesced  in  the  demand  and  gave  his  resignation. 

As  chairman  of  said  companies  your  orator  had  participated  largely  in 
and  directed  the  business  conducted  by  them  and,  until  the  time  of  his 
enforced  resignation,  said  business  was  conducted  to  a  large  extent  under 
his  personal  supervision,  management,  and  direction.  Carnegie  lived  in 
New  York  City.  He  spent  much  of  his  time  abroad,  remaining  there  con- 
tinually, at  one  time,  for  over  eighteen  months.  Of  course  he  was  con- 
sulted about  important  matters,  but  he  rarely  participated  in  the  current 
management  of  the  business. 

For  various  reasons,  none  just,  not  necessary  now  to  be  stated,  but 
which  will  appear  hereafter  in  the  taking  of  testimony,  Carnegie 
has  recently  conceived  a  personal  animosity  towards  your  orator. 
This  partly  arose  from  the  failure  of  you£  orator,  in  connection  with 
others,  to  avail  of  an  option  given  by  Carnegie  in  consideration  of  the 
sum  of  one  million,  one  hundred  and  seventy  thousand  dollars  ($1,170,000), 
to  Carnegie  paid,  and  now  retained  by  him,  as  a  forfeit  to  purchase  his 
(Carnegie's)  interest  in  said  Steel  Company,  Limited,  for  the  sum  of  about 
one  hundred  and  fifty-seven  million,  nine  hundred  and  fifty  thousand  dollars 
($157,950,000),  which  sum  Carnegie  insisted  should  be  so  preferred  and 
secured  that  he  would  virtually  have  a  first  mortgage  on  all  the  partnership 
assets  and  thus  gain  a  preference  over  all  his  partners. 

As  has  been  heretofore  said,  on  the  4th  day  of  December,  1899,  with- 
out good  reason,  and  from  malevolent  motives  towards  me,  Carnegie  de- 
manded the  resignation  by  your  orator  of  his  office  of  chairman  of  said 
company.  This  resignation,  in  the  interest  of  harmony,  was  tendered. 
Since  that  time  Carnegie  has  secured  control  of  the  whole  association  and 
of  its  affairs,  and  has  compelled  the  co-partners,  other  than  Henry  Phipps, 
Jr.,  F.  T.  F.  Lovejoy,  and  Henry  M.  Curry,  and  perhaps  others,  who  refused 
to  carry  out  his  orders  and  desires,  to  pass  such  resolutions  and  do  such 
acts  as  he  dictated,  without  regard  to  their  conformity  to  their  real  wishes, 

365 


366  APPENDIX 

or  to  their  judgment,  as  to  the  true  policy  of  the  association.  Many  of  the 
partners  were  unable  or  unwilling  to  incur  his  animosity,  lest  he  might  at- 
tempt to  forfeit  their  interests  in  the  association.  Some  of  them  were  prac- 
tically unable  to  resist  his  will  because  of  their  large  indebtedness  thereto. 

In  order  that  he  might  injure  your  orator,  whilst  benefiting  himself, 
Carnegie  conceived  a  scheme  to  forfeit  the  interest  of  your  orator  in  the 
association,  worth  upwards  of  fifteen  million  dollars  ($15,000,000),  in  such 
way  as  would  not  oblige  him  to  pay  therefor  one-half  of  its  real  value  and 
would  enable  him  to  make  payment  therefor  in  small  instalments  at  very 
long  intervals  of  time. 

As  part  of  this  fraudulent  scheme,  Carnegie,  who  had  rarely  attended 
the  meetings  of  the  Board  of  Managers  of  the  Steel  Company,  Limited, 
theretofore  held,  presented  himself  at  a  meeting  of  the  said  board,  held  on 
the  8th  day  of  January,  1900,  after  the  resignation  by  your  orator  of  his 
chairmanship,  and  when  he  was  not  present.  Carnegie  then  presented  to 
said  Board  of  Managers  resolutions  by  him  previously  prepared,  which  he 
caused  to  be  adopted.  Many  of  the  statements  in  said  resolutions  were 
false.  The  whole  of  the  resolutions  were  misleading.  In  them  he  referred 
to  a  certain  so-called  iron-clad  agreement.  Carnegie  followed  up  his  action 
in  this  respect  by  obliging  the  Board  of  Managers  to  instruct  the  secretary 
to  receive  signatures  to  this  so-called  iron-clad  agreement,  which,  for  the 
first  time,  he  called  a  supplemental  iron-clad  agreement,  of  July  ist,  1892. 
No  such  agreement  had  ever  been  executed  by  Carnegie.  Many  other 
members  of  the  firm  had  never  executed  the  same.  This  so-called  agree- 
ment was  inoperative  and  void.  Carnegie  knew  that  it  was  void  and  in- 
operative. He  knew  that  neither  he  nor  the  Carnegie  Steel  Company  had 
any  power  to  compel  any  person  to  sell  his  interest  in  the  firm  in  pursuance 
thereof ;  yet,  knowing  this,  without  your  orator's  knowledge,  secretly,  after 
said  resolutions  had  been  passed,  he  signed  for  the  first  time  said  so-called 
iron-clad  agreement  of  July  ist,  1892.  At  the  same  time,  or  shortly  after, 
he  caused,  directly  or  indirectly,  other  persons  to  sign  the  same,  with  a 
fraudulent  intent  thereby,  and  without  your  orator's  knowledge  or  consent, 
to  make  a  contract  for  him  under  which  he,  Carnegie,  could  seize  your 
orator's  interest  in  said  firm.  All  these  acts  he  carefully  concealed  from 
your  orator,  his  partner.  Subsequently,  in  person,  Carnegie  threatened 
your  orator  when  he  called  upon  him,  that  unless  he  would  do  what  he, 
Carnegie,  desired,  he  would  deprive  your  orator  of  his  interest  in  the  firm. 
In  pursuance  of  his  fraudulent  intent  and  in  furtherance  of  his  said  scheme 
of  fraud,  Carnegie  caused  to  be  served  on  your  orator  on  the  I5th  day  of 
January,  1900,  a  notice  purporting  to  be  given  under  and  in  pursuance  of 
said  so-called  iron-clad  agreement.  In  this  demand  was  made,  in  the  name 
of  Carnegie  and  in  that  of  other  persons  who  had  been  forced  by  him  to 
sign  the  same,  that  your  orator  should  transfer  his  interest  in  said  Carnegie 
Steel  Company,  Limited.  Having  failed  to  secure  this  transfer,  Carnegie 
persuaded  Schwab,  one  of  the  defendants,  who  was  acting  as  president  of 
said  association,  to  transfer,  on  the  first  day  of  February,  1900,  on  the 
books  of  the  company,  your  orator's  interest  in  said  Steel  Company,  Lim- 
ited, as  if  he  were  entitled  to  make  said  transfer  as  attorney  in  fact  of  your 
orator.  After  Schwab  had  made  this  pretended  transfer,  Carnegie  pre- 
tended, now  pretends,  and  many  of  the  partners  under  his  compulsion 
pretend,  that  the  Carnegie  Steel  Company,  Limited,  owns  all  your  orator's 
interest  in  said  firm.  Carnegie,  being  the  owner  of  58 J  per  centum  of  the 
entire  capital  thereof,  is  now  pretending  to  be  the  owner  of  over  60  per  cen- 
tum of  your  orator's  said  interest,  thus  pretended  to  have  been  acquired. 
Carnegie  further  pretends  that  he  need  not  and  will  not  pay  for  your 


THE  EQUITY  SUIT  367 

orator's  interest  what  it  is  fairly  worth,  but  that  he  can  only  be  compelled 
to  pay  a  price  which  will  be  determined  by  himself,  and  by  the  partners  he 
controls.  This  price,  he  contends,  can  only  be  demanded  by  your  orator 
in  such  small  instalment  during  a  term  of  years  of  such  duration  as  will, 
probably,  not  only  enable  the  company  to  entirely  pay  for  your  orator's 
interests  by  using  the  share  of  the  profits  applicable  to  them,  but  have  a 
surplus  left  to  the  company.  Thus,  it  is  part  of  Carnegie's  scheme  not 
only  to  seize  your  orator's  interest,  but  to  make  it  pay  for  itself  out  of  the 
profits,  and  thereafter  leave  Carnegie,  in  large  part,  the  owner  of  said 
interests,  with  a  large  surplus  of  money  besides.  Though  Carnegie  pre- 
tends that  he  had  thus  secured  a  large  part  of  your  orator's  interest  in  a 
way  which  will  inure  to  his  benefit,  he  denies  all  individual  liability  what- 
ever for  its  payment,  and  claims  that  the  only  party  who  will  be  obliged  to 
pay  the  price  he  will  determine  to  give  will  be  the  Carnegie  Steel  Company, 
Limited,  which  he  will  use  for  that  purpose. 

The  exact  manner  in  which  Carnegie  will  seek  to  depreciate  the  value 
to  be  paid  for  your  orator's  interest  cannot  be  stated  by  your  orator  in  de- 
tail with  certainty;  but  he  believes  and  therefore  avers  that  although 
Carnegie's  attention  and  that  of  the  defendants  have  been  called  by  him  to 
the  fact  that  the  values  of  the  company  assets  on  its  books  were  wholly  in- 
adequate, and  although  he  and  the  defendants  have  been  requested  to 
make  said  values  conform  with  the  truth,  he,  the  said  Carnegie,  will  use 
figures  put  upon  the  books  years  ago,  which  are  obsolete,  and  are  not  by 
any  of  the  defendants  pretended  to  be  correct ;  will  fail  to  put  any  valuation 
upon  assets  of  immense  value ;  and  will  resort  to  other  illegal  and  unfair 
devices. 

Your  orator  shows  to  your  Honors  that  this  attempt  of  Carnegie  to 
expel  him  from  the  firm  and  seize  his  interest  therein  at  but  a  mere  fraction 
of  its  real  value,  is  not  made  by  him  in  good  faith  and  for  the  best  interests 
of  the  Carnegie  Steel  Company,  Limited.  It  is  not  actuated  by  honorable 
motives  on  his  part,  nor  for  the  future  good  of  the  firm,  but  is  a  determina- 
tion to  punish  your  orator,  principally,  because  of  the  failure  of  the  scheme 
by  which  Carnegie  was  to  realize  over  $157,000,000  for  his  interest,  and, 
also,  in  part,  to  make  gain  for  himself  by  seizing  your  orator's  interest  at 
very  far  below  its  real  and  fair  value. 

In  order  that  the  business  of  the  firm  of  the  Carnegie  Steel  Company, 
Limited,  might  not  be  jeopardized  by  inharmonious  relations  between  the 
partners  and  that  its  enormous  business  might  be  carried  on  by  united  and 
harmonious  action,  your  orator  was  willing,  upon  ascertaining  the  animosity 
of  Carnegie  towards  himself,  and  his  determination  to  drive  him  from  the 
firm,  to  dispose  of  his  interest  therein  at  a  fair  value.  This  fact  was  stated 
by  your  orator  to  Carnegie  when  the  latter  called,  in  January,  1900,  at  his 
office,  in  an  endeavor  to  coerce  the  making  of  a  sale  by  your  orator  at  a 
price  below  what  was  fair.  An  offer  was  then  made  by  your  orator  to 
Carnegie  that  in  case  a  fair  price  could  not  be  agreed  upon  for  his  interest, 
which  the  latter  insisted  upon  securing,  that  your  orator  would  agree  to 
refer  to  the  arbitration  of  three  disinterested  men,  the  determination  and 
fixing  of  a  fair  value.  This  offer  Carnegie  refused,  doubtless  because  he 
hoped  to  acquire  such  interest  at  much  less  than  the  fair  value  thereof  by 
means  of  his  fraudulent  scheme  hereinbefore  set  out,  which  scheme  he  was 
then,  though  without  any  intimation  of  that  fact  to  your  orator,  secretly 
perfecting  and  determined  to  carry  into  effect. 

Your  orator  still  is  willing,  in  order  that  harmony  may  be  preserved 
and  that  the  great  interests  involved  may  not  be  subjected  to  jeopardy,  to 
sell  his  interest  in  the  Carnegie  Steel  Company,  Limited,  at  a  fair  value,  to 


368  APPENDIX 

be  ascertained  by  three  disinterested  business  men.  He  now  tenders  his 
willingness  so  to  do. 

Notwithstanding  the  fraudulent  actions  of  Carnegie,  your  orator  also  is 
willing,  in  order  that  the  enormous  business  interests  of  the  Carnegie  Steel 
Company,  Limited,  may  be  protected,  without  injury  to  any  of  its  partners, 
to  continue  the  business  of  the  said  firm  in  accordance  with  the  true  spirit 
of  the  articles  of  agreement  of  July  ist,  1892,  creating  the  same. 

If,  as  your  orator  is  advised  and  believes,  the  said  articles  created  a 
general,  and  not  a  limited,  partnership,  he  is  willing,  and  now  tenders  such 
willingness,  to  have  such  action  taken  by  the  firm  and  by  the  partners 
thereof  as  will  make  the  said  firm  strictly  a  limited  partnership,  as  origi- 
nally intended.  Your  orator  is  further  willing,  and  now  tenders  such 
willingness,  to  continue  the  Carnegie  Steel  Company,  Limited,  as  a  general 
partnership,  if  he  is  allowed,  as  one  of  the  partners,  to  participate  in  the 
management  thereof,  claiming  no  other  or  further  right  than  that  of  a 
general  partner  in  a  general  partnership. 

Your  orator  is  not  willing,  however,  to  continue  the  general  partnership 
under  the  sole  control  of  Carnegie,  without  being  allowed  to  have  any  par- 
ticipation therein,  Carnegie  is  so  engaged  in  other  occupations  and  diver- 
sions that,  were  he  otherwise  able  so  to  do,  he  cannot  properly  manage 
and  carry  on  said  business.  Your  orator  believes  and  avers  that  the 
financial  prosperity  of  the  firm  will  be  impaired  by  the  exclusive  manage- 
ment and  control  of  the  same  by  Carnegie. 

All  of  the  defendants  excepting  Henry  Phipps,  F.  T.  F.  Lovejoy  and 
Henry  M.  Curry,  and  possibly  others,  at  the  instance  of  Carnegie,  now 
claim  that  your  orator  has  no  interest  in  the  Carnegie  Steel  Company, 
Limited,  and  that  his  only  right  is  to  demand  from  said  company,  at  long 
postponed  periods,  such  amount  in  compensation  as  Carnegie  shall  be 
willing  to  concede  him. 

Your  orator  thus  by  the  fraudulent  acts  of  Carnegie  and  the  acqui- 
escence therein  of  the  defendants,  other  than  those  above  named  has  been 
ejected  from  the  Carnegie  Steel  Company,  Limited,  and  has  been  and  is 
now  denied  any  participation  in  its  business.  Your  orator's  interest  therein 
has  been  taken  possession  of  by  the  defendants,  and  they  at  the  instance  and 
under  the  domination  of  Carnegie,  are  now  carrying  on  the  said  business, 
alleging  that  they  will  continue  to  carry  it  on  as  if  your  orator  had  no  in- 
terest therein. 

Your  orator  alleges  that  the  whole  effort  v-hich  has  been  made,  and 
which  the  defendants  are  now  seeking  to  make  effectual,  is  in  pursuance  of 
said  fraudulent  scheme  of  Carnegie  to  practically  seize  your  orator's  interest 
in  said  firm.  This  attempt  is  being  made,  although  Carnegie  knows,  and 
all  the  defendants  know,  that  the  prosperity  of  the  firm,  in  considerable 
partj  is  the  result  of  your  orator's  continuous  and  close  personal  manage- 
ment of  the  same,  from  the  time  of  its  organization. 

Your  orator  denies  that  there  is  or  was  when  said  notice  was  given  any 
contract  under  which  the  defendants  have  acquired,  or  lawfully  can  acquire, 
his  interest  in  said  firm. 

He  avers  that  the  attempt  to  acquire  the  same  and  said  pretended 
transfer  thereof  by  said  Schwab,  are  illegal  and  void.  Schwab  was  not  the 
attorney  in  fact  of  your  orator  to  make  said  transfer  nor  did  he  have  any 
lawful  authority  so  to  do. 

Wherefore  your  orator  needs  equitable  relief,  and  prays  as  follows : 

First.  A  decree  that  the  pretended  transfer  of  your  orator's  interests 
in  the  Carnegie  Steel  Company,  Limited,  was  and  is  null  and  void.  .  .  . 

Second.     An  injunction,  now  special,  hereafter  to  be  made  final,  re- 


THE  EQUITY  SUIT  369 

straining  the  defendants  from  any  interference  with  your  orator's  interest 
in  said  Carnegie  Steel  Company,  Limited,  and  from  excluding  him  from 
a  participation  in  the  care  and  management  of  the  assets  and  business. 

Third.  An  injunction,  special  until  hearing,  and  perpetual  thereafter, 
enjoining  and  restraining  the  defendants  from  conducting  the  business 
operations  of  the  firm  called  the  Carnegie  Steel  Company,  Limited,  without 
permitting  your  orator  to  participate  therein. 

Fourth.  An  injunction,  special  until  hearing,  and  perpetual  thereafter, 
enjoining  and  restraining  the  defendants  from  tranf erring  to  the  Carnegie 
Steel  Company,  Limited,  or  to  any  person  or  persons,  or  corporation,  your 
orator's  interest  in  the  said  Carnegie  Steel  Company,  Limited. 

Fifth.  A  decree  ordering  the  defendants  to  cancel  upon  the  books  of 
the  said  firm,  any  assignment  or  transfer  heretofore  made,  or  pretended  to 
be  made,  to  said  association,  of  your  orator's  interest  in  said  firm,  and  all  fur- 
ther assignments,  if  any,  to  any  other  persons,  of  your  orator's  said  interests. 

Sixth.  A  decree  ordering  the  defendants  to  join  with  your  orator  in 
conducting  and  managing  the  affairs  and  business  and  properties  of  the 
Carnegie  Steel  Company,  Limited. 

Seventh.  A  decree  ordering  the  defendants  to  cancel  and  erase  all 
entries  upon  the  books  of  the  firm  of  the  Carnegie  Steel  Company,  Limited, 
of  insufficient,  unfair,  and  improper  valuations  of  its  assets  and  of  your 
orator's  interest  therein,  and  to  cause  the  said  books  so  to  be  kept  as  to 
fairly  and  fully  show  the  real  value  of  the  Carnegie  Steel  Company,  Limited, 
as  a  going  concern  and  your  orator's  interest  therein. 

Eighth.  In  case  the  defendants  shall  refuse  the  offers  hereinbefore 
by  your  orator  made,  .  .  .  that  your  Honorable  Court  will  thereupon 
allow  your  orator  to  declare  the  said  firm  of  the  Carnegie  Steel  Company, 
Limited,  dissolved,  and  that  you  will  thereupon  appoint  a  receiver  to  take 
charge  of  all  the  business  and  assets  of  the  said  firm,  permitting  said 
receiver  to  fulfil  unperformed  contracts  and  to  do  whatever  shall  be 
necessary  in  and  about  the  proper  liquidation  of  its  affairs,  and  that,  after  the 
conversion  of  the  entire  assets  of  the  company  into  money  and  the  payment 
of  the  debts  of  the  said  company,  your  Honorable  Court  will  then  distribute 
the  balance  thereof  among  the  partners  in  proportion  to  their  interests. 

Ninth.  That  an  account  be  taken  between  Carnegie  and  your  orator, 
whereby  Carnegie  shall  be  charged  with  all  the  losses,  expenses,  and  dam- 
age he  has  caused  your  orator  by  his  illegal  and  fraudulent  conduct 
hereinbefore  stated;  and  hat  if  Carnegie  persists  in  his  said  fraudulent 
scheme  and  refuses  the  offers  hereinbefore  made,  and  thus  causes  the 
actual  dissolution  of  the  firm,  all  losses  incurred  by  your  orator  by  reason 
of  the  said  dissolution  and  forced  winding  up  of  the  firm  shall  be  charged 
against  him,  and  that  he  shall  be  decreed  to  make  good  and  pay  to  your 
orator  the  difference  between  what  his  interest  was  fairly  worth  on  or 
about  February  ist,  1900,  and  the  amount  he  shall  receive  through  the 
decree  of  this  court  in  final  liquidation  and  settlement  of  the  said  firm. 

Tenth.  That  all  entries  Carnegie  or  any  other  person  has  caused  to 
be  made  on  the  books  of  the  Carnegie  Steel  Company,  Limited,  in  pursu- 
ance of  said  fraudulent  scheme  of  said  Carnegie,  shall  be  erased  and 
cancelled  under  the  decree  of  this  Honorable  Court. 

Eleventh.     General  relief. 

JOHN  G.  JOHNSON, 
D.  T.  WATSON, 
WILLIS  F.  McCooK, 

Solicitors  for  Plainti^ 


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